[Senate Hearing 117-727]
[From the U.S. Government Publishing Office]
S. Hrg. 117-727
HEALTH INSURANCE COVERAGE IN AMERICA:
CURRENT AND FUTURE ROLE OF
FEDERAL PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 20, 2021
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
53-154--PDF WASHINGTON : 2023
COMMITTEE ON FINANCE
RON WYDEN, Oregon, Chairman
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
MARIA CANTWELL, Washington CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey JOHN CORNYN, Texas
THOMAS R. CARPER, Delaware JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland RICHARD BURR, North Carolina
SHERROD BROWN, Ohio ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania TIM SCOTT, South Carolina
MARK R. WARNER, Virginia BILL CASSIDY, Louisiana
SHELDON WHITEHOUSE, Rhode Island JAMES LANKFORD, Oklahoma
MAGGIE HASSAN, New Hampshire STEVE DAINES, Montana
CATHERINE CORTEZ MASTO, Nevada TODD YOUNG, Indiana
ELIZABETH WARREN, Massachusetts BEN SASSE, Nebraska
JOHN BARRASSO, Wyoming
Joshua Sheinkman, Staff Director
Gregg Richard, Republican Staff Director
(II)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
on Finance..................................................... 1
Crapo, Hon. Mike, a U.S. Senator from Idaho...................... 3
CONGRESSIONAL WITNESSES
Scott, Hon. Rick, a U.S. Senator from Florida.................... 5
Warnock, Hon. Raphael, a U.S. Senator from Georgia............... 7
WITNESSES
Isasi, Frederick, J.D., MPH, executive director, Families USA,
Washington, DC................................................. 10
Holtz-Eakin, Douglas, Ph.D., president, American Action Forum,
Washington, DC................................................. 11
Collins, Sara R., Ph.D., vice president, health care coverage and
access, The Commonwealth Fund, New York, NY.................... 13
Blumberg, Linda J., Ph.D., institute fellow, Urban Institute,
Washington, DC................................................. 15
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Bennet, Hon. Michael F.:
Prepared statement with attachment........................... 59
Blumberg, Linda J., Ph.D.:
Testimony.................................................... 15
Prepared statement........................................... 64
Responses to questions from committee members................ 102
Collins, Sara R., Ph.D.:
Testimony.................................................... 13
Prepared statement........................................... 107
Responses to questions from committee members................ 123
Crapo, Hon. Mike:
Opening statement............................................ 3
Prepared statement........................................... 129
Holtz-Eakin, Douglas, Ph.D.:
Testimony.................................................... 11
Prepared statement........................................... 130
Responses to questions from committee members................ 136
Isasi, Frederick, J.D., MPH:
Testimony.................................................... 10
Prepared statement........................................... 148
Responses to questions from committee members................ 154
Scott, Hon. Rick:
Testimony.................................................... 5
Scott, Hon. Tim:
Submissions for the record................................... 157
Thune, Hon. John:
Letter from Phillip L. Swagel to Representative Jason Smith,
October 19, 2021........................................... 164
Warnock, Hon. Raphael:
Testimony.................................................... 7
Wyden, Hon. Ron:
Opening statement............................................ 1
Prepared statement........................................... 173
Communications
Americans for Prosperity......................................... 175
Center for Fiscal Equity......................................... 183
Consumers for Affordable Health Care............................. 188
First Focus Campaign for Children................................ 190
Healthcare Leadership Council.................................... 194
HR Policy Association and American Health Policy Institute....... 197
National Association of Health Underwriters...................... 198
National Retail Federation....................................... 200
National Taxpayers Union......................................... 201
Partnership for Employer-Sponsored Coverage...................... 207
Patients Rising.................................................. 209
Stanfield, Lee................................................... 211
Western PA Coalition for Single Payer Healthcare................. 212
HEALTH INSURANCE COVERAGE IN AMERICA:
CURRENT AND FUTURE ROLE OF
FEDERAL PROGRAMS
----------
WEDNESDAY, OCTOBER 20, 2021
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10 a.m.,
via Webex, in Room SD-215, Dirksen Senate Office Building, Hon.
Ron Wyden (chairman of the committee) presiding.
Present: Senators Stabenow, Cantwell, Cardin, Bennet,
Casey, Whitehouse, Hassan, Cortez Masto, Warren, Crapo,
Grassley, Cornyn, Thune, Portman, Toomey, Cassidy, Lankford,
Daines, and Young.
Also present: Democratic staff: Shawn Bishop, Chief Health
Advisor; Elizabeth Dervan, Health Counsel; Eva Dugoff, Senior
Health Advisor; Peter Fise, Health Counsel; Michael Evans,
Deputy Staff Director and Chief Counsel; and Kristen Lunde,
Health Policy Advisor. Republican staff: Caleb Graff, Senior
Health Policy Advisor; Kellie McConnell, Health Policy
Director; Stuart Portman, Senior Health Policy Advisor; and
Gregg Richard, Staff Director.
OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
OREGON, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order.
So many of the major health policy debates happening in the
Senate today come down to the same basic challenge: health care
is a human right. But without insurance coverage, you cannot
exercise that right fully. The emergency room is no substitute
for high-quality insurance and a doctor who takes your call.
The committee, handling our Federal health programs and tax
credits for health care, is right at the center of the effort
to close the coverage gap and move the U.S. closer to universal
health coverage. There is a lot of work to be done.
And the fact is, when you look back at the events of the
last few years, the historic change, for example, to eliminate
discrimination against those with preexisting conditions will
always be regarded as a hallmark of public health policy.
Right now, we are working on crucial efforts; for example,
to show that we can provide relief to people at the pharmacy
counter who feel they are getting mugged, while at the same
time promoting innovation. And we are on the cusp of a historic
opportunity to provide coverage to seniors and the disabled
through home and community-based services.
So these are all a handful of the particularly promising
opportunities for the days ahead. And we are going to start
this morning with Senator Reverend Warnock, who has become the
conscience of the Senate on the basic question of closing these
coverage gaps.
Reverend Warnock was a crusader for health care long before
he was a member of the Senate. His home State of Georgia is one
of a handful of States where Republican leaders have blocked
the expansion of Medicaid. Instead of getting health coverage
to many of the most vulnerable people in their State, they are
clinging to a decade-old political grudge against the
Affordable Care Act.
That is one aspect of the health coverage challenge the
committee is going to discuss today. The committee will also
talk about building on what worked in the response to COVID-19.
Earlier this year, reversing a Trump policy that restricted
coverage to people during the pandemic, President Biden
announced a special enrollment period for health insurance.
Nearly 3 million people signed up for coverage. As part of the
American Rescue Plan that passed in March, Democrats in
Congress made signing up for that coverage more affordable.
Democrats made coverage more affordable during the eye of the
pandemic, and we did it by expanding the ACA's tax credits for
health care.
All in all, consumers who updated their health coverage
during that special enrollment period saved on their net
monthly premiums an average of 40 percent. Nearly two of three
consumers could get a plan with zero premium now after tax
credits. Extending those improvements, in my view, ought to be
seen as a no-brainier, as a way to improve health coverage and
put money back in the pockets of Americans.
Now, in addition to expanding coverage, today's hearing is
also an opportunity to discuss how to make that coverage more
valuable to patients themselves. We Democrats believe deeply in
updating the Medicare guarantee, because we know that seniors
need dental care and vision and hearing assistance. It is
unthinkable that these gaps in Medicare coverage are allowed to
persist.
Similarly, as I noted, we are working on a plan to let
seniors and people with disabilities get the care they need in
the place where they are most comfortable: at home. And Senator
Casey, a valued member of the committee, deserves enormous
credit for that effort.
Now, before I wrap up, I want to deal with some of the
distortions that are offered up with respect to health care.
And I am going to deal with one kind of central issue that I
think deserves special attention.
None of the plans I have talked about will reduce the
solvency of Medicare's hospital insurance trust fund at all--
not one bit. Those benefits will have different sources of
funding. They will not be part of Medicare Part A, which is
what the trust fund covers.
So, let's be clear and make sure the public understands it.
None of the plans that we are talking about will reduce by one
bit the solvency of Medicare's hospital insurance fund.
Furthermore, Republicans trot out this same attack in all the
advertisements and campaigns every time Democrats propose a
significant improvement to health care--and it is never true.
The Affordable Care Act, for example, extended the solvency of
Medicare by 12 years, but Republican political campaigns
falsely claimed just the opposite. And they continued to make
the claim even after it was fully and repeatedly debunked.
Also, we know that stated concerns by Republicans over
Medicare's finances did not stop them from attempting to repeal
the ACA, which would have devastated Medicare's finances had
they succeeded. The Trump tax law even reduced payments into
Medicare's trust fund. Just think about that one. That flawed,
horrendous 2017 tax bill actually reduced payments into
Medicare's trust fund.
Now, we are all going to work together on the hospital
insurance trust fund going forward. We are going to work in a
bipartisan way. We are going to extend the olive branch to our
colleagues to do that, rather than create another artificial
crisis.
The fact is, Democrats here in the Senate have been working
constantly to uphold Medicare's finances, while upholding the
promise of guaranteed benefits.
So we have a lot to discuss today. We are going to have a
lively hearing, I am sure. I want to thank particularly
Reverend Warnock for being here to discuss some of these
crucial access issues today, and we are looking forward to Q&A.
Senator Crapo?
[The prepared statement of Chairman Wyden appears in the
appendix.]
OPENING STATEMENT OF HON. MIKE CRAPO,
A U.S. SENATOR FROM IDAHO
Senator Crapo. Thank you, Mr. Chairman, and welcome to our
witnesses. I would like to especially thank Senator Scott for
coming today and for highlighting the critical role that States
play in our health-care system, as well as how we can work to
address affordability issues for all Americans. He has proven
that he knows how to do it.
As we look forward to our future in the health-care system,
we have a responsibility to enhance care quality, to increase
affordability, and to improve access to life-saving services
and treatment options, from diagnostics to cutting-edge
therapies.
Any reforms we adopt moving forward should build on what
works within our current system, in addition to addressing
hurdles to high-quality, low-cost health care. We should look
to the unprecedented success of Medicare Part D and Medicare
Advantage, which empower consumers to choose what works best
for them.
In contrast with top-down, bureaucratic health-care models,
these programs leverage choice and competition to expand
coverage while lowering costs and enhancing care quality.
Outside of Medicare, these same core principles have driven a
wide range of promising reforms. Employers who provide coverage
to roughly half of the population have adopted diverse tools
and models to incentivize workers to seek out lower-cost,
higher-quality care options.
States have adopted waivers and flexibilities to tailor
their Medicaid programs to best meet their needs and strategic
goals. Our health-care system has substantial room for
improvement, but these creative and market-based models provide
a compelling blueprint for bipartisan reform.
We have seen strong bipartisan backing for proposals to
expedite Medicare coverage for cutting-edge devices, to avoid a
telehealth access cliff for seniors, and to cap out-of-pocket
spending under Part D. I have also worked with multiple members
of this committee on both sides of the aisle to ensure Medicare
beneficiary access to tests that detect dozens of cancers at an
early stage, reducing mortality and allowing for proactive
care.
These types of policies have the potential to lower
consumer costs while improving health-care outcomes.
Unfortunately, some of the proposals currently under
consideration risk moving in the opposite direction, with
potentially dire unintended consequences for Americans. In
addition to exacerbating inflation and weakening our economic
recovery, the trillions of dollars in taxing and spending
proposed by House Democrats would advance a range of policies
that could hinder health-care outcomes and drive up costs, with
taxpayers paying the burden.
The proposed drug price controls, imposed under the guise
of negotiation, impose a threat to our global leadership in
biomedical innovation. A recent University of Chicago study
found that the price-fixing policies included in the bill would
slash research and development funding by up to 60 percent,
reduce the number of new drugs approved in the next 20 years by
as many as 342, and trigger a loss of life as much as 20 times
what the COVID-19 pandemic has inflicted on our Nation.
House Democrats have also proposed making their poorly
targeted Obamacare premium subsidy hike permanent. This
proposal does nothing to improve Obamacare plans or to address
the underlying health-care costs.
The administration has also taken a series of steps that
risk constraining consumer choices, delaying or weakening
coverage, and undermining innovation. A number of States that
had devoted months, if not years, to crafting comprehensive
improvements to their Medicaid programs saw their hard work
thrown away overnight as the administration rescinded their
waivers, seemingly for political purposes.
This approach undermines the State-Federal partnership at
Medicaid's core and creates tremendous uncertainty, in addition
to eliminating opportunities for innovation. The administration
also announced plans to roll back a popular rule aimed at
expediting access to lifesaving medical devices for seniors.
This regulation would be a game-changer for patients suffering
from cancer, diabetes, and a broad range of other conditions.
Disappointingly, it may never go into effect.
I stand ready and eager to work with the administration and
members of both parties to pursue policies that improve health-
care outcomes, expand access to lifesaving drugs and devices,
and drive costs down for both the consumer and the taxpayer.
From telehealth expansion to outcomes-based payment
arrangements, there are endless opportunities for us to come
together on common ground and meet the needs of the American
people. We should set aside needless tax hikes and wasteful
spending and instead take advantage of these opportunities.
Again, I thank our witnesses for their time, and I look
forward to hearing from all of you.
[The prepared statement of Senator Crapo appears in the
appendix.]
Senator Stabenow [presiding]. Well, good morning, and thank
you very much, Senator Crapo. Our chair, Senator Wyden, has had
to step out for a moment, so I will step in in his stead. We
are going to hear from two colleagues, as we know: Senator
Scott and Senator Warnock. I am going to pass the gavel back to
Senator Crapo to introduce Senator Scott.
Senator Crapo [presiding]. Well, thank you, Madam
Chairwoman, and I appreciate that. I think Senator Scott really
needs no introduction. The former Governor of Florida has
extensive experience in working with these health-care issues,
particularly the Medicaid and other issues, and showing how the
kinds of solutions I have talked about in my opening statement
work on the ground.
So, I want to thank Senator Scott for coming and sharing
his expertise and the experiences that Florida has shown us can
work.
STATEMENT OF HON. RICK SCOTT,
A U.S. SENATOR FROM FLORIDA
Senator Scott. Thank you. Thank you, Senator Crapo. Thank
you for holding this hearing on the Federal Government's role
in our health system. It is an important topic, and one that is
deeply personal to me.
Growing up, my family lived in public housing and often
failed to have health insurance. My brother had a rare disease,
and because my mom did not have health insurance, she had to
drive to a charity hospital 4 hours away for his treatment. It
was really hard on my mother.
I am a business guy, and everything I do is goal-driven.
Everything I do is driven by my mother--by the experience of
watching my mom struggle to feed five children. It is with that
in mind that I set the following goals for government's role in
health care.
We must ensure access to affordable health care. We must
ensure families receive quality care. We must ensure that the
available services for those truly in need are never inhibited
by poor management of government programs. And we must never
promise something we cannot afford.
None of us would make promises to our children we could not
fulfill. We should not over-promise to the American public.
With those goal sets, we also need to abide by some governing
principles. Without these guidelines, we cannot measure our
success in properly serving the American people.
First, we must acknowledge that more Federal control is
never a solution. Our goal is to ensure American families have
access to affordable health care that States individually
choose.
We believe we must empower patients first with information
transparency. Think about how easy it is to find the price of
milk or an oil change. Now, how easy is it to find the price of
a mammogram or the price of a common blood test?
The biggest fix for our health-care system is price and
outcome transparency. Through price transparency, up-front
pricing, and service and outcome measurements, consumers would
be empowered to choose suppliers that best fit their needs, and
providers would be driven to offer services based on price,
quality, and service, like any other important amenity.
How do we make choices now? We ask, is it in network? Is it
close to our home or work? Those are not factors that drive
quality, value, or lower prices. But real price transparency
would be a paradigm shift away from providers and insurers to
empowered consumers.
Second, for those who are truly in need, we need to achieve
better outcomes to target subsidies to the consumer. We already
do this through Federal food assistance programs. The
government does not run the grocery store or the farm. Stores
compete against each other for business, and that competition
drives down the cost of food, increases the quality of food,
and gives customers the freedom to choose.
Similarly in health care, it is critical that we do not
allow government to be the provider or insurer for the American
people. That is the role of the private market, and the private
market can do it much better than government.
We need more competition and less government control. The
core to this is two concepts: consumer choice and price
transparency--two concepts completely absent from health care.
Of course we need to ensure that those receiving these benefits
truly qualify. As with all government programs, I am a strong
supporter of requirements that recipients who are not disabled
are actively working or looking for work. We cannot allow
people to simply ride along on government programs with no
qualifiers. It is not fair to the people who are working.
In addition, we cannot make promises to Americans that a
country with nearly $30 trillion in debt, and staggering budget
deficits, cannot fulfill.
Third, we must preserve Medicare and Medicaid. I believe
Medicaid is best when States are allowed flexibility. The
Governors should have control over how their States spend their
State tax receipts and serve their vulnerable populations.
This is best done through per capita funding. It is a
system that ensures total fairness and has complete
flexibility. Let each Governor build a plan that reflects their
priorities for vulnerable populations. There should be 50 State
labs with custom plans for their priorities and populations.
For Medicare, we must ensure that we do not allow this
program to go insolvent. Part A is already forecast to go
bankrupt by 2026. Part B, which pulls directly from the
Treasury, is going to be a larger and larger stress to our
Nation's budget.
And let us remember, our Nation cannot meet its existing
financial obligations. I have said about Social Security and
other critical programs, we cannot allow cuts to the main
services. This is just another example of the importance of
eliminating reckless government spending and stopping the
current path towards unsustainable debt we are on. This is the
best way to protect Medicare.
In conclusion, everyone should have access to affordable
care. As I said in my opening, everything I do is driven by my
mom's experience. We can and must set a course for government
to have a productive role ensuring access to affordable care
for every American family--families like mine growing up. But
we have to do it by living within our means. Government's role
should be absolutely limited. We cannot over-promise or under-
deliver.
I look forward to working toward the goals I have outlined
here today with each of you, and I thank you for allowing me to
speak in front of the Finance Committee. Thank you.
Senator Stabenow [presiding]. Well, thank you, Senator
Scott.
We will now turn to our colleague from Georgia. And I will
say, since coming to the Senate, that Senator Warnock has given
a voice to so many Georgians who lack health insurance
coverage, and I know he is here today to speak about the
importance of expanding Medicaid in States like Georgia that
have yet to expand under the Affordable Care Act.
So welcome, Senator Warnock.
STATEMENT OF HON. RAPHAEL WARNOCK,
A U.S. SENATOR FROM GEORGIA
Senator Warnock. Well, thank you so much, Senator Stabenow.
And thank you for your leadership on so many issues. I am
grateful to Chairman Wyden and Ranking Member Crapo for having
me here today to talk about health coverage, an issue that is
near and dear to my heart.
In my home State of Georgia, there are 275,000 Georgians in
the coverage gap--this is an equity issue--47 percent of whom
are Black, 9 percent who are Latino; 63 percent are working
families. There are still 500,000 Georgians who are uninsured,
646,000 Georgians who would quality for free and affordable
health coverage if Georgia joined the 38 other States and the
District of Columbia in expanding Medicaid.
So our mission today for me is very clear. Today we have
the opportunity to uphold the promise we made 11 years ago when
we passed the Affordable Care Act, and provide quality,
affordable, and comprehensive health coverage to 4.4 million
Americans. And every day that we delay is another day that the
least among us continue to suffer, as we debate whether and how
to expand health-care coverage here in a State where lives are
literally caught in the crosshairs.
We need to remember the faces of those who are affected by
the policies we choose to create and not create, the human cost
of the policy work we do here in the Senate. There are real
consequences for real people when we fail to do what we were
sent here to do.
So today I just want to recount a story that I told on the
Senate floor not long ago, and I want to lift up the life of a
Georgian who fought to expand Medicaid as she and other
Georgians lived in the coverage gap.
Every time I talk about this issue, I think about Lorie
Davis of Covington, GA. She was one of our heroes, and she
spent much of her life serving her neighbors. She was a trauma
nurse at the Grady Memorial Hospital, a hospital not far from
my home and my church. I have seen the incredible work they do
there every day.
But while working as a health-care professional in Atlanta
at Grady Hospital, Lorie was diagnosed with pelvic adhesive
disease. The chronic pain associated with this condition
eventually pushed her to leave the nursing profession. And
after that, while also working to manage her own chronic
condition, she struggled to maintain steady employment in
restaurants.
During this time, Lorie could not afford health insurance.
She made too much to qualify for Medicaid, but not enough to
qualify for subsidies and afford other insurance plans. I am
hearing a lot of talk about ``choice.'' Choice is an illusion
if you do not have the resources.
This left Lorie unable to purchase health insurance because
it was financially out of reach. She lived in the health-care
coverage gap. And she went without coverage for years, relying
on her own medical training and free health-care clinics to
treat her chronic condition.
And then in August 2020, Lorrie began feeling ill. Her
condition got worse. And fearful of costs, she delayed seeking
health-care coverage. Think about that. Lorie, who spent her
life treating her neighbors in the Grady Memorial Hospital,
living in the wealthiest Nation on the planet, delayed seeking
health-care coverage because she could not afford it.
It seems to me that, as members of this body, we should be
ashamed that in the richest Nation in the world, and a country
with some of the best health-care coverage in the world, some
citizens would choose not to seek treatment because they fear
they cannot afford it, the price tag of lifesaving care.
So the next month, in September 2020, Lorie was admitted to
the hospital with pneumonia. And while there, she learned she
had lung cancer, a treatable condition had she received an
earlier diagnosis. Put together, it was too much. And on
September 17, 2020, Lorie passed away after her short battle
with pneumonia.
Lorie's story would have been different, could have had a
different ending, if she lived in Oregon, if she lived in
Idaho, or most of the other States represented here. Can you
imagine Medicare in 38 States? Can you imagine Social Security
in 38 States? Conventional Medicaid in 38 States? We cannot
imagine it because it is the law of the land.
Well, 11 years later, the Affordable Care Act is the law of
the land. This is not about rewarding States with bad behavior.
This is not about your State, or my State, a red State, or a
blue State. This is about a very basic principle: in the United
States of America, access to quality, affordable health care
should not depend on where you live. And we should not allow
State politicians to undermine that basic principle. Americans
are literally dying for lack of health-care coverage. And so,
let me be clear, as I wrap up. I am a little bit over time--
forgive me, I am a Baptist preacher.
I am not asking for additional benefits for Georgia, or
better coverage for those in Georgia, or those in the 11 other
non-expansion States. I am asking for basic fairness and
equity. I am asking especially that we give the working poor--
because largely that is what we are talking about in the
coverage gap--give the working poor a chance.
I am asking that every American everywhere in every State
and every ZIP code have the same opportunity and the same right
to live. Dr. King said that, of all the injustices, inequality
in health care is the most shocking and the most inhumane. I
believe that health care is a human right, and in America it
ought to look that way in every single State.
Thank you so much.
Senator Stabenow. Well, thank you very much, Senator
Warnock.
We will proceed now with today's hearing. We have an
excellent panel of witnesses who bring deep, substantial
expertise on health-care coverage and Federal programs. I will
introduce each one, and then we will proceed with their
testimony.
First, Frederick Isasi, who is the executive director of
Families USA, a leading nonprofit, nonpartisan health-care
advocacy organization providing a voice for consumers, focused
on improving access to affordable health care in America. Mr.
Isasi previously served in roles at the National Governors
Association and the Advisory Board Company. Prior to that, he
served as Legislative Counsel on Health Care for Senator Jeff
Bingaman, a former member of this committee. And he holds a
juris doctorate from Duke University School of Law, a masters
in public health from the University of North Carolina, and a
bachelor of science from the University of Wisconsin. So,
welcome.
Next we will hear from Dr. Douglas Holtz-Eakin, who is the
president of the American Action Forum. From 2003 to 2005, Dr.
Holtz-Eakin served as the Director of the Congressional Budget
Office. He also has previously served on the Financial Crisis
Inquiry Commission, as well as serving as the Paul A. Volcker
Chair of International Economics at the Council of Foreign
Relations. He earned his Ph.D. in Economics from Christian
University and his bachelor of arts in economics and
mathematics from Denison University. Welcome.
Then we will hear from Dr. Sara Collins, who is the vice
president for health-care coverage and access at the
Commonwealth Fund. Dr. Collins directs the Fund's program on
coverage and access, and has led several multiyear national
surveys on national health insurance. Prior to joining the
Commonwealth Fund, she served as associate director and senior
research associate at the New York Academy of Medicine. Dr.
Collins received her Ph.D. in economics from George Washington
University and her bachelor's degree in economics from
Washington University.
And finally, we will hear from Dr. Linda Blumberg. Dr.
Blumberg is an institute fellow in the Health Policy Center at
the Urban Institute. Dr. Blumberg is an expert on private
health insurance coverage, health-care financing, and health
systems reform. Her recent work includes analysis of the
implication of congressional proposals to repeal and replace
the Affordable Care Act, as well as analysis of strategies to
improve the ACA, and other policy proposals to expand health
insurance coverage. Dr. Blumberg received her Ph.D. in
economics from the University of Michigan--go Blue--and her
bachelor of arts in economics from the University of Illinois.
So let us start first with Mr. Isasi, and we welcome you.
STATEMENT OF FREDERICK ISASI, J.D., MPH,
EXECUTIVE DIRECTOR, FAMILIES USA, WASHINGTON, DC
Mr. Isasi. Thank you very much, Senator Stabenow, Ranking
Member Crapo, and members of the Finance Committee. Good
morning, and it is an honor to speak with you. My name is
Frederick Isasi. I am the executive director of Families USA.
For over 40 years we have been a leading national nonpartisan
voice for health care for consumers here in DC, in States, and
State capitols.
I have been asked to testify on the current State of health
insurance and health-care affordability across the country. Let
me start by saying, looking back over the last 15 years, we
have made some real gains, with much more work left to do.
For example, after the Affordable Care Act passed in 2010,
20 million people gained health insurance, many for the first
time in their lives, either through new Medicaid access or
through health insurance marketplaces. Over the next 6 years,
coverage numbers continued to go up until 90 percent of our
Nation was insured.
Then, in 2017, the Trump administration began slashing
programs to help families find coverage, and authorized the
sale of junk health insurance. All told, at least 2 million
people lost coverage because of President Trump's policies.
Most sadly, for the first time in over 20 years we watched as
children lost coverage. Three-quarters of a million children
became uninsured.
And then the COVID-19 pandemic hit our Nation so very hard.
As millions of Americans lost their jobs, about 6 million
people lost their employer-sponsored coverage. Almost three-
quarters were able to secure coverage through Medicaid or the
marketplaces. In fact, the only measurable increase in the
uninsured occurred in the States that have refused to extend
Medicaid to their poorest residents.
And let me describe to you what this experience is like for
so many millions of Americans. Let me tell you about a very
courageous woman named Della Young. In 2004, Della was
diagnosed with lupus. This can be a really painful illness in
which the immune system starts attacking the body. Patients are
left with terrible weakness and fatigue, which without medical
care worsens over time, and can even lead to organ failure or
death. Because Della lives in Rhode Island and New York, she
was able to access the critical services she needed through
Medicaid and Medicare. Eventually, when her immune system
attacked her kidneys, she was even able to receive an organ
transplant.
However, in 2015, this all changed. Della moved to Georgia
to be with her mother battling cancer. Georgia is one of the 12
States that has refused to extend Medicaid coverage to its
poorest people. To help support herself, Della took a part-time
job that included walking 4 miles, taking a train and two
buses, so she could work her 4-hour shift.
Unbelievably, despite being far below the poverty level,
Della was ineligible to receive Medicaid because her income was
over the State allowance by less than $100. Let me say that
again. Despite being far below the poverty level, less than
$100 stood between Della and her ability to continue to receive
health care.
So, what happened? Tragically, but predictably, Della could
not afford to pay for the expensive medications, and she lost
her kidney. Della was forced to return to a life of costly and
exhausting dialysis. She has even less ability to work, and as
each day passes she goes deeper and deeper into medical debt.
Della's mom lost her battle with cancer, and Della is now
relying on a GoFundMe page to finance her care.
Simply put, it is a national disgrace. Nearly half of the
adults in our Nation report they do not seek medical care when
they need to because of cost. One-third indicate the cost of
medical care interferes with their ability to secure basic
things like food, heat, and housing. And a third, nearly 80
million people, skip doses or cut medication because of cost.
And let us not forget, despite spending so much more than other
wealthy nations, just about $4 trillion, our moms and babies
die at much higher rates, live shorter lives, and our health-
care system is much more likely to fail us, leading to a
patient's death.
There is more to say, and it is good news. The American
Rescue Plan you passed earlier this year made critical
investments and improved the affordability of health care for
hardworking families. As a result, nearly 3 million people
signed up for coverage in the marketplaces, and, incredibly,
average premium costs for these families were cut in half.
And now, the Build Back Better legislation gives all of you
an opportunity to finish the job you started. You can deliver
for our Nation's families. Making premium subsidies permanent,
ensuring kids have 12 months of eligibility in Medicaid, and
authorizing a Federal Medicaid fallback, are three critical
ways to deliver for our families.
Tackling the outrageous and abusive prices charged by drug
companies is also essential to making health care affordable,
as is creating new dental, vision, and hearing benefits in
Medicare. These are interrelated policies, and they are the
greatest opportunity in at least a decade to help our Nation's
families achieve health and economic well-being.
On behalf of Della and the tens of millions of Americans
struggling with health-care affordability, let us get this
done. Thank you very much for the opportunity to testify on
behalf of our Nation's families, and I really look forward to
your questions.
[The prepared statement of Mr. Isasi appears in the
appendix.]
Senator Stabenow. Thank you so much.
We would now like to turn to Dr. Douglas Holtz-Eakin, and
we appreciate your testimony.
STATEMENT OF DOUGLAS HOLTZ-EAKIN, Ph.D., PRESIDENT, AMERICAN
ACTION FORUM, WASHINGTON, DC
Dr. Holtz-Eakin. Senator Stabenow, Ranking Member Crapo,
and members of the committee, thank you for the privilege of
being here today to discuss health insurance coverage. I hope
to make three brief points in my remarks, and I look forward to
your questions.
Point number one is that the vast majority of Americans are
covered by insurance. Over half, 54 percent, have employer-
sponsored insurance. About 18 percent each are in Medicare and
Medicaid. And 10 percent are covered by the individual market.
The second major point is that, with the onset of the
pandemic, we saw government programs serve as a very effective
safety net. With the coronavirus arrival on the North American
continent, there were predictions of large-scale losses in
employment. As we have seen, the overall uninsured rate has
barely budged over that time. This is really attributable to
both the fact that a lot of the job losses were concentrated in
sectors of the economy where
employer-sponsored insurances are more scarce--and so they were
not covered to begin with--but also that Medicaid did its job
and picked up some of those who lost their ESI.
Then the third point, and the one I want to really
emphasize, is that for about the past 15 years we have had a
conversation about health-care reform, the need for affordable
coverage for Americans, and for lower-cost, higher-quality
care. And for the past 15 years, I think the coverage
discussion has dominated the thinking about government
programs. And I would like to urge you to shift the focus
somewhat to make sure that those programs deliver high-value
care; that we see cost controls and improvements in quality in
the programs that are so important to Americans.
For example, Medicare Advantage has been a great success
story. About 41 percent of seniors are in MA, and it is
forecast to be the majority of Medicare beneficiaries in the
near future. It provides incentives for cost control because of
its capitated features. Plus, with the improved quality
metrics, especially outcome measures for high-quality care, MA
can provide a vehicle for driving a better delivery system in
the United States. MA offers individuals lots of choices for
which plan they choose, and it is different in every part of
the country because population and health care differs across
the country. It is an excellent vehicle for driving high-value
care in the U.S., and I urge you to focus on that.
As was mentioned in his opening remarks by the ranking
member, Part D is a fantastic program, but it is now 15 years
old and could use some additional reforms and improvements.
There have been a lot of proposals to redesign the Part D
benefits to accomplish really two big objectives.
The first would be to have a genuine cap on out-of-pocket
cost and insulate our seniors from catastrophic costs from
their prescription drugs. And the second would be to rearrange
the reimbursement so that the taxpayers are no longer
responsible for costs in the catastrophic region--that is about
80 percent of the cost of Part D right now--but instead, have
insurers and manufacturers of prescription drugs liable for the
cost in that region. That would give them an incentive to
negotiate and develop cheaper drugs that didn't drive people
into the catastrophic region, and also for prescription drug
plans to manage seniors so that they did not have utilization
that landed them in the catastrophic region.
That would enhance the basic features of private
negotiation that have made the Part D program our most
successful entitlement. Since Part D is also about 25 percent
of drug spending in the United States, this would have
spillover benefits across all of the economy and be a step in
the right direction for preserving innovation, but reducing the
cost of prescription drugs.
And lastly, we have seen a lot of success in managed care
organizations in Medicaid in many States across the country. A
system of competition among Medicaid care organizations as a
foundation for the future of Medicaid would offer the same
promises as the system of competition in the MA plans and
deliver higher-quality, higher-value care to the less affluent
Americans.
So I applaud you for having this hearing. Coverage remains
something that people care a lot about, and appropriately so,
but what that coverage delivers in the way of the value of
health care, I think should be an increasingly large focus of
the committee and the Congress as a whole.
Thank you.
[The prepared statement of Dr. Holtz-Eakin appears in the
appendix.]
Senator Stabenow. Thank you very much for your testimony.
And we will now hear from Dr. Sara Collins, who I believe
is with us electronically.
STATEMENT OF SARA R. COLLINS, Ph.D., VICE PRESIDENT, HEALTH
CARE COVERAGE AND ACCESS, THE COMMONWEALTH FUND, NEW YORK, NY
Dr. Collins. Thank you, Madam Chair, members of the
committee, for this invitation to testify on the current status
of employer health insurance coverage. My comments will focus
on trends in enrollment, worker costs of employer insurance,
and policy options to improve workers' coverage.
Employer health insurance is the backbone of the U.S.
health insurance system, and it proved to be resilient during
the pandemic. More than half the population under age 65, about
163 million people, get their health insurance through an
employer.
This has changed very little over the last decade. Nearly
all companies with 200 or more workers offer insurance to their
employees. Small firms and employers in some sectors of the
economy, including food services and retail, are far less
likely to offer coverage.
Only about 6 percent of working-age adults reported that
they lost employer coverage during the pandemic. This is
because the hardest-hit industries were the least likely to
offer coverage, and many companies who furloughed workers
continued to pay at least part of their workers' premiums.
The Affordable Care Act's coverage expansions provided a
safety net for people who lost employer coverage. The safety
net was enhanced by Federal relief efforts such as the American
Rescue Plan Act, enhanced marketplace subsidies, and
marketplace special open enrollment periods. Two-thirds of
workers who lost employer coverage gained other coverage.
Still, nearly three in 10 became uninsured, which reflects
ongoing holes in our coverage system and a lack of awareness of
options.
The key issue for many workers with employer coverage is
affordability. The U.S. has a health-care spending problem in
commercial insurance plans, and many people with employer
coverage are paying the price. New data out this month indicate
that per-person spending in employer plans grew by nearly 22
percent over 2015 to 2019, outpacing bills, inflation, and GDP
growth.
The data show that prices paid for health-care services and
prescription drugs were the primary drivers, and accounted for
nearly two-thirds of overall growth. These high prices are
associated with higher employer premiums. And, because
employers share their premium costs with their workers, worker
premium contributions and deductibles are also rising. Worker
premium contributions and deductibles in employer plans
together accounted for 11.6 percent of median household income
in 2020, up from 9 percent in 2010.
Across the country, premium contributions and deductibles
were 10 percent or more of median income in 37 States in 2020,
up from 10 States in 2010. High deductibles are a barrier to
care and leave millions of people underinsured and exposed to
medical bills.
The Commonwealth Fund estimates that about one-quarter of
people on employer plans have such high out-of-pocket costs and
deductibles relative to their incomes that they are effectively
underinsured. Across the country, average deductibles in
employer plans relative to median income were 5 percent or more
in 22 States. A deductible that is 5 percent or more of income
is our threshold measure of someone who is underinsured.
In a 2020 Commonwealth Fund survey, more than one-third of
adults with a deductible of $1,000 or more said they had not
gotten needed health care due to costs. In the same survey, 40
percent of adults with a deductible of that size reported they
had experienced problems paying medical bills, or paying off
medical debt over time.
In a 2021 Commonwealth Fund survey among adults in employer
plans who had problems paying medical bills or were paying off
debt over time, 40 percent said they had received a lower
credit score because of their medical bills; 40 percent had
taken on credit card debt to pay their bills; and 35 percent
had used up most of their savings to pay their bills.
Medical bill problems are endemic to our health-care system
and are ruining many families' financial health. There are
several actions that could help workers burdened by employer
premiums and deductibles. They include making the American
Rescue Plan Act marketplace subsidies permanent; providing
comprehensive and affordable coverage for people eligible for
Medicaid in the 12 non-
expansion States; increasing awareness among workers of their
options to enroll in marketplace plans and Medicaid; fixing the
Affordable Care Act's family coverage glitch, which is
preventing millions of family members from accessing
marketplace subsidies; and lowering the ACA's employer premium
affordability threshold from 9.8 to 8.5 percent.
With this, if combined with the fix to the family coverage
glitch, no one would have to spend more than 8\1/2\ percent of
their income for health insurance, lowering deductibles and
out-of-pocket costs in marketplace plans. In addition to the
historic No Surprises Act, imposing stronger consumer
protection rules for people struggling to pay their medical
bills, addressing the high commercial provider prices that are
the primary driver of employer premiums and deductibles, and
finally, developing an auto-enrollment mechanism, would help
people enroll and stay enrolled in comprehensive coverage.
Thank you.
[The prepared statement of Dr. Collins appears in the
appendix.]
Senator Stabenow. Thank you very much. We very much
appreciate your testimony.
And finally, we will hear from Dr. Linda Blumberg. Welcome.
STATEMENT OF LINDA J. BLUMBERG, Ph.D.,
INSTITUTE FELLOW, URBAN INSTITUTE, WASHINGTON, DC
Dr. Blumberg. Thank you for inviting me to address current
issues related to health insurance in the U.S. While I am an
employee of the Urban Institute, the views expressed in this
testimony are my own and should not be attributed to the Urban
Institute, its trustees, or its funders.
Research has demonstrated that the Affordable Care Act has
increased health insurance coverage in the U.S. among the non-
elderly by more than 20 million people. The enhancements of
premium tax credits provided by the American Rescue Plan Act
have increased coverage further, albeit temporarily given the
limited duration of the enhanced credit period. These have also
improved affordability of insurance coverage and increased
access to care for millions of Americans.
As a result, the U.S. health insurance system provided a
stronger safety net during the pandemic and economic downturn
than in prior recessions. According to the Urban Institute's
Health Monitoring Survey, the number of non-elderly adults with
employer-based insurance fell by approximately 5\1/2\ million
people between March 2019 and April 2021. Yet, unlike prior
recessions, the number with Medicaid increased even more.
As a consequence, the number of uninsured held steady,
instead of increasing nationwide. However, while nationwide
data is encouraging, the number of uninsured rose in non-
expansion States because smaller shares of people who lost
employer coverage were eligible for Medicaid. Still, nationwide
the private non-elderly insurance marketplaces are by all
indications fundamentally stable.
In 2021, the national average benchmark premium fell for
the third year in a row, with average decreases in 43 States,
only one State where the increase was more than 6 percent,
following very large premium increases in 2018. In addition,
insurer participation in the marketplaces has increased since
2017 in many population centers. However, in areas with lower
insurer participation and/or consolidation among health
providers, premiums and premium growth tends to be higher.
Even recognizing the successes, significant gaps remain in
the health insurance system, for more than 3 million people
living below the poverty line, and 1.2 million near-poor
people, are uninsured and ineligible for any financial
assistance because they live in States that have not expanded
Medicaid eligibility
In addition, ARPA services temporarily increased our
marketplace subsidies. My Urban Institute colleagues estimate
that the number of uninsured nationally will reach 30 million
in 2022. Conversely, they estimate that making the ARPA
subsidies permanent and extending them to lower-income people
in non-expansion States would decrease the uninsured by another
7 million people at a net Federal cost of $27.7 billion in 2022
dollars, or $333 billion over 10 years. In addition, these
estimates indicate that such policies would increase
marketplace enrollment while decreasing marketplace premiums by
18 percent on average, because of the relatively better average
health of the new enrollees.
Taking lower premiums and out-of-pocket costs into account,
the average per-enrollee health-care cost for those insured
through the marketplaces would be over $1,100 lower per year.
While such opportunities exist with this coverage, further
action also must be considered, because the ending of the
national public health emergency will also end the requirement
that States keep people enrolled in Medicaid. And this
transition poses future challenges for coverage.
Urban Institute estimates indicate that Medicaid enrollment
could decrease by as many as 15 million people during 2022,
once the PHE-related maintenance requirement ends, including
8.7 million adults and 5.9 million children. These numbers are
partly offset by the projection that one-third of those adults
who qualify for subsidized private health coverage are in the
marketplaces. About two-thirds of the children would be
eligible for assistance, much of it through CHIP.
However, others have postulated that the number losing
Medicaid coverage at the end of the PHE could exceed 15 million
people, given the difficulty of contacting still-eligible
people to reverify and renew enrollment when they have not been
in contact with the Medicaid system for close to 2 years. Thus,
the risk of a significant increase in the number of people
uninsured following the end of the PHE is substantial, and such
risk merits legislative and administrative consideration.
As I have outlined, permanent enhanced premium tax credits
should encourage more people to move from Medicaid to the
marketplace once they lose Medicaid eligibility. Further,
aggressive outreach and enrollment efforts at the State and
Federal levels, in addition to streamlining Medicaid
redetermination and enrollment processes, are among viable
options available to address the potential for a near-term
increase in the number of uninsured Americans.
Thank you for the opportunity to share information with you
on these important issues, and I would be happy to answer any
of your questions.
[The prepared statement of Dr. Blumberg appears in the
appendix.]
Senator Stabenow. Well, thank you so much to all of our
witnesses, and we will now proceed with comments and questions
from the committee.
First let me start by saying that whenever we have a
discussion--and I have been involved in the committee now for a
long time, and in health-care coverage policy for a long time--
there really is a fundamentally different view between
Democrats and Republicans about health care and about, is it a
fundamental right? Is it about privilege if you have a job that
has insurance, if you are able to afford health care? There is
just a fundamentally different view that gets the same kind of
arguments coming out all the time about whether or not we
should act and move forward on things.
Fifty-five years ago, only about half of the seniors over
age 65 had health insurance that would cover a stay in the
hospital. And far fewer had insurance that would cover surgery
or outpatient physician visits. And at the time, the private
insurance industry could just refuse to cover higher-risk,
older people. They would get sick. They would get dumped from
their insurance plan, and it was likely if you got sick, you
could end up in bankruptcy, which means that the elderly were
the group most likely in the United States to be living in
poverty. That is what was happening then. And many hospitals
around the country were rigidly segregated as well.
We believe, as Democrats, that it was critical to expand
access to quality, affordable health insurance. And after
decades of fighting for it, in July 1965 it finally happened
with President Lyndon Johnson signing Medicare and Medicaid
into law.
In the decades since, we have continued to fight for
expanded coverage and benefits. And as we have talked about, in
2010 the Affordable Care Act, the biggest improvement to health
care since the creation of Medicare and Medicaid, brought
insurance to 31 million Americans. And that includes 14.8
million Americans through the expansion of Medicaid coverage.
In my State, that is about 950,000 people who are now covered.
And I should say, this was a bipartisan effort in Michigan,
which I appreciated very much.
I share Senator Warnock's concerns for the millions of
Americans left without health care because of the refusal of
Republicans in 12 States to expand Medicaid. So, expanding
Medicaid is the right thing to do. It is the smart thing to do.
It also saves money in Michigan, because people are not going
to emergency rooms who do not need it, who just need to see a
doctor. So we have seen hundreds of millions of dollars in
savings.
But this year then, if I could say a bit more, we addressed
health care again in the American Rescue Plan, lowering health-
care premiums in insurance exchanges by about 40 percent--a
pretty big cut. And we created an option to provide 12 months
of post-partum coverage under Medicaid.
And I will say, as we have been going through this, that
one bright light I appreciate so much is the bipartisanship
that we have done together on behavioral health. Mental health
and substance abuse treatment should be viewed as health care,
funded as health care. I appreciate Senator Blunt and my
colleagues on this committee who have been working together to
make progress on that.
But the bottom line is, there is just a fundamental
difference in how we view health care moving forward.
Mr. Isasi, what do you think are the biggest gaps right now
in the Medicare program? And what should we be doing about
them?
Mr. Isasi. Thank you so much, Senator Stabenow. The three
main things that I would point to--first, let us be really
clear. We have heard this over and over again. Right now the
biggest crisis in American health-care coverage is price. We
cannot currently negotiate fair drug prices. We have got to
tackle the abuses of drug companies. It is very popular. The
American people want this across the political spectrum. We
have got to get this done.
Second, Medicare does not cover essential services like
dental, vision, and hearing benefits. It does not make any
sense. These are core to the needs of Medicare beneficiaries,
in particular seniors. We have got to solve that problem.
And then finally, I agree strongly with my colleague, Dr.
Holtz-Eakin. Currently the way that we are paying for health
care incentivizes waste, and it incentivizes high-margin, high-
profit services over actual health. We have got to change the
way that we pay for health care.
I do want to say, Medicare Advantage is not the answer. We
know that, underneath Medicare Advantage payments, what we see
is just traditional fee-for-service volume-based payments. We
have to actually make sure that the new incentives are reaching
the doctors, the nurses, the hospitals, and making sure the
people who are actually improving health, maintaining health,
and solving health problems do well under the system, and the
people who are just driving towards volume and high price fail.
Thank you very much, Senator Stabenow.
Senator Stabenow. Well, thank you very much.
And our distinguished chairman has returned, trying to be
two places at once. I think we need to figure out how to do
``beam me up, Scotty'' so we can all do that at the same time.
But, Senator Wyden?
The Chairman. In fact, Senator Crapo, if we could reverse
it and you could start with questions, and then I would go,
just for purposes of breath-catching----
Senator Crapo. I would be glad to let you catch your
breath, Mr. Chairman.
Dr. Holtz-Eakin, I want to start out with what is a big
threat to the ability of our country to be able to deal with
the cost of health care, and that is the impact of some of the
proposals before Congress for some massive new taxation and
spending that is going to have macroeconomic impacts on
everything, including the health care that we are talking about
today.
In addition to numerous and major expansions of government
into health markets, the administration's Build Back Better
plan contains many concerning tax proposals that threaten the
economic recovery in the short term, and threaten economic
growth and American competitiveness in global markets in the
long term.
Your organization provided results in April from economic
models to assess the macroeconomic implications of the Build
Back Better plan, including the tax provisions. The tax
proposals in the plan appear from that analysis to have
significant negative macroeconomic implications.
Can you discuss those findings, please?
Dr. Holtz-Eakin. Certainly. We heard during the course of
the campaign for the Presidency about the Build Back Better
plan, so in the aftermath of the election we commissioned this
study so that it was done by some scholars at Rice University
using models that are essentially identical to the Joint
Committee on Taxation's macro models.
So we have some idea of what the implications of those
proposals would be. The basic findings are that imposing
trillions of dollars in new taxes is a severe headwind to
economic growth and would diminish it considerably. I think
there was a lot of consensus on that. But what we heard from
the other side was that the spending programs are going to be
so effective that they are going to outweigh that, and we will
get better economic growth.
So we had them literally modeled, taking all the money and
spending it--no deficit finance--spending it entirely on
productive infrastructure and R&D, the highest return things
that they could identify in the research literature, and the
net effect was negative for the economy over 10 years.
And so, if you compare that modeling exercise--lots of tax
increases, highly targeted and effective spending--with what is
actually in the legislation, the spending is far less targeted
on productive infrastructure and R&D. And so the impacts are
going to be even more negative than our model indicated.
Senator Crapo. All right; thank you. And I think it is very
important to understand that we have to stop the injuries to
the economy if we want to deal with helping people afford
health care.
Let me move again, Dr. Holtz-Eakin, with you, to drug
pricing. Driving down premiums and expanding coverage requires
us to tackle not just the price of insurance products, but also
the underlying cost of care. When we look at the key drivers of
health-care spending growth, there is no doubt that certain
specialty prescription drugs have a substantial impact, at
least when they first come to market. That said, the
nonpartisan Congressional Budget Office has repeatedly noted
that medications can also play a crucial role in reducing costs
elsewhere in the health-care system, including at more
expensive sites of care.
Moreover, once products go off patent and their
exclusivities expire, the prices generally drop dramatically.
And I would note that currently, more than 90 percent of all
prescriptions are filled with generic drugs, not patent-
protected brand-name products.
The House Democrats' proposed drug pricing controls,
unfortunately, would undermine the current balance, drastically
reducing the number of new treatments coming into the market
and deterring innovative R&D.
In your view, Dr. Holtz-Eakin, what impact would the House
drug pricing proposals have on health-care access and quality?
And what types of policies do you see as the right ones? I know
you touched on this, talking about Part D in your statement,
but would you just respond to that generally?
Dr. Holtz-Eakin. Certainly. I am quite concerned about the
proposals that were in H.R. 3 and are now in the Ways and
Means-passed legislation. Those proposals essentially--the
international reference price is a price control. The supposed
negotiation with the Secretary of HHS is really not a
negotiation. The threat is a 95-percent sales tax on domestic
sales. It is not deductible for income tax purposes, so the
effective rate is over 100 percent.
So essentially, you know, you have the Secretary in the
position of being judge and jury. It is just demanding the
price they want. We know from looking at other countries that,
while prices are lower, access to medicines is much more
limited. In many cases, the most innovative therapies do not
arrive for 2 and 3 years, if they arrive at all. In many cases,
they do not.
In the U.S., 90 percent of innovative therapies are on the
market in 3 months, if people have access to care. So, while it
looks like those other countries are not paying much, they are
paying for it in less high-quality care, less access to the
most innovative therapies. And I think the reforms that I
outlined on Part D would be a very good starting point.
They are bipartisan in nature. They have been in
legislation proposed by Democrats, legislation proposed by
Republicans. Presidents have supported them. They would improve
the negotiation incentive in Part D, and thus lower prices
broadly going into the commercial markets as well. And they
would protect seniors from catastrophic costs, and that is
overdue.
So, I think that is a good place to start. It does not
threaten innovation in the system. It does promise access to
high-quality drugs for seniors.
Senator Crapo. Thank you.
The Chairman. Thank you, Mr. Chairman, and thank you for
the fact that, whenever we have to juggle in the morning, you
are always trying to help out.
I want to make sure we get a quick and accurate accounting
of the Medicare ledger, because we have heard, back and forth,
various kinds of analyses.
Dr. Collins, you have been an expert in this, and I want to
have you lay out for us, on the record, a direct response to
the key question. And the key question is, would proposals like
a public option or a dental, vision, and hearing benefit in
Medicare Part B have a negative impact on the Medicare Part A
trust fund?
I would like you to give us a ``yes'' or ``no'' answer to
that question, and then if you could, amplify why that is the
case. Because I think that is absolutely central to our
discussion going forward. And I had mentioned, colleagues, that
we are kind of looking back a little bit today to the
accomplishments of the Affordable Care Act. And I said, if
nothing else had been done in the Affordable Care Act other
than finally ending the insane proposition that you
discriminate against people with preexisting conditions, that
would have been an incredible accomplishment. And you listed
others.
So we are talking about looking back, and we are talking
about looking forward. And I see our friend, Senator Casey, who
is a huge part of looking forward, because he has got us on the
cusp of an incredible change with respect to seniors and the
disabled, frankly one I have dreamed about since the days when
I was codirector of the Oregon Gray Panthers.
So, exciting days are coming up. And part of what we want
to make sure we are clear on today is where we stand on some of
these key issues like the Medicare Part A trust fund. So my
question for you, Dr. Collins, apropos of just briefly
restating it: would these proposals like a public option, or
dental, vision, and hearing benefits in Medicare Part B, have
any negative impacts on the Medicare Part A trust fund?
Dr. Collins. No, they would not, because they are financed
out of other revenue sources. So the trust fund would not be
affected because it is for Part A benefits.
And to your point on the Affordable Care Act, those three
important provisions extended the Medicare trust fund solvency
and reduced the scheduled updates to Part A providers, reducing
the Medicare disproportionate share payments and also,
importantly, increasing the payroll tax for upper-income
households. So the Affordable Care Act had a very positive
impact----
The Chairman. Dr. Collins, just one other point on that,
because I have already said that we are all in a position--and
Senator Crapo and I have worked on so many big issues in a
bipartisan way, and in fact Senator Grassley and I teamed up on
the prescription drug issue. I think we ought to be teaming up
again on the question of the Part A trust fund going forward.
And just so we are clear, Dr. Collins, I think you said,
had the Affordable Care Act been repealed--as there was an
effort to do in the Senate--that would have hurt the Medicare
Part A trust fund further. Is that correct?
Dr. Collins. That is correct.
The Chairman. All right; thank you very much. It is very
helpful that we really, colleagues, have an accurate and
straightforward accounting of the Medicare ledger by dint of
Dr. Collins's comments.
So let me ask you one other question in the short bit of
time that I have. And that is, it seems to me that the
Affordable Care Act was an extraordinary lifeline to millions
of Americans during the pandemic.
We were hit like a wrecking ball with this virus that
nobody imagined, and it seems to me that the Affordable Care
Act and the American Rescue Plan stepped in and served as a
lifeline for families during the pandemic and economic
downturn. Families who had a loved one at home were trying to
figure out how they were going to deal with all the costs. When
job losses mounted, workers not only lost their jobs. The
Affordable Care Act marketplaces and Medicaid were there during
that pandemic to make sure that millions of families had access
to the health care they needed.
So my question to you, Dr. Blumberg, is--you know, I do not
think you can just go out and magically recession-proof
everything, but I think we would be very much better off if we
knew the details of how Medicaid and the ACA premium tax
credits for insurance coverage met the needs of American
families during the pandemic.
Dr. Blumberg. Sure. Senator, this recession related to the
pandemic is really the first test of the safety net that was
enhanced and strengthened by the Affordable Care Act. And the
ARPA subsidies just enhanced that further. So it was the first
time in a recession in memory where the number of people
uninsured did not increase.
In fact, the only areas in which the number of those
without health insurance coverage did increase was in the
States that had not expanded Medicaid under the Affordable Care
Act. So, while employer-sponsored insurance did fall
significantly, as it has in every prior recession on record,
the number of uninsured nationally stayed basically constant
because some people moved into a marketplace coverage that was
there and available to them, and then people who lost much more
income were enrolled in the Medicaid program.
So, without it, we would have seen a significant increase
in the uninsured, as we have over the years. But ARPA subsidies
made that coverage even more affordable to people during this
crisis. And so that was also important.
The Chairman. Thank you. And I thank all our witnesses. We
have been working with the leadership and all the members this
morning in trying to deal with Build Back Better, and I
apologize for being out.
Senator Grassley is next. I am going to go vote. And,
colleagues, what we are going to try and do is keep this
moving. A number of colleagues on both sides of the aisle have
asked that we hold this hearing to kind of start airing ideas
for the future. That is the point of it.
Senator Grassley, I am going to run and vote. Thank you for
your courtesy. You are next, and let me also give you the list
so you have a sense of the order.
Okay; thank you, colleagues.
Senator Grassley. Most of my questions will be to Dr.
Holtz-Eakin because of his background being CBO Director. I
have worked for 3 years to pass a bipartisan bill to lower
prescription drug prices. While Democrats attempt to advance
their partisan drug-pricing program, I hope that common sense
will prevail and that we will pass a bipartisan prescription
drug bill.
I have engaged with colleagues on both sides of the aisle
in both the House and Senate. All of the Republicans and
Democrats I have contacted have expressed eagerness to find a
solution to meaningfully lower prescription drug prices.
Dr. Holtz-Eakin, for decades the Congressional Budget
Office, the nonpartisan referee, has said government drug price
dictation does not save money unless you restrict access to
patients through limiting formularies.
First, is that correct, Dr. Holtz-Eakin?
Dr. Holtz-Eakin. Yes, that is correct.
Senator Grassley. Okay. Also to you: is government drug
pricing negotiation a real negotiation? Or is the government
dictating prices?
Dr. Holtz-Eakin. It is the government dictating prices. And
you cannot do a real negotiation unless you have a restriction
on the formula, or a restriction for access in some way. Or, in
this instance, another lever, which is a 95-percent tax on
sales in the U.S. market. So that is not a negotiation, that is
dictating the prices.
Senator Grassley. Okay. I would note that, in 2019, this
committee held three hearings on prescription drug pricing,
followed by a markup, along with numerous other bipartisan
conversations. Given the bipartisan interest in this committee
in lowering prescription drug costs--and many questions the
American people ought to have answered about the package the
majority is now considering--I am very curious if this
committee will be holding any hearings on prescription drug
pricing in the future.
So getting back to you, Dr. Holtz-Eakin, President Obama's
own OMB Director has said this about changes to the
noninterference clause, quote: ``Negotiating ability alone is
largely feckless,'' end of quote.
Can you save money if you do not limit access, like
restricting the formulary, or dictating prices based on
domestic or international reference pricing?
Dr. Holtz-Eakin. No. Every CBO Director since the American
Modernization Act passed has come to the conclusion that there
is no additional genuine negotiating leverage that the
Secretary of HHS would have. Prescription drug plans have lots
of beneficiaries, but they have market shares, and they have
formularies which they can offer as a way to expand their
sales, and that is how you get a lower price. The Secretary of
HHS does not have any of those things.
Senator Grassley. Dr. Holtz-Eakin, in your previous
testimony you stated that government price dictation would
restrict access if you want to achieve savings. Academic
research has also confirmed that. Can you expand on how
patients will be hurt by the proposed government drug pricing
dictation policy?
Dr. Holtz-Eakin. The spirit of these proposals has always
been to look to other countries as the reference price as a
starting point of dictating the prices. And, if you look at the
experience in those countries, the way prices are lowered is,
the government is saying ``no'' to many drugs. And they are not
available to their citizens.
As we know--and the ranking member pointed this out; it is
an important point--there is not a general drug pricing
problem, but we have high prices for some specialty drugs on
patent, largely oncology drugs. Those are the most innovative,
most effective modern treatments. And their arrival on the
market in the U.S. comes in the first 3 months. By and large,
they simply do not arrive, and certainly not in a timely
fashion, in these other countries.
So we would be saying to our citizens, ``We do not want you
to have the best care.'' That is what those proposals would
produce.
Senator Grassley. Okay.
I think maybe you have just now answered this question, but
let me ask it anyway. If we disincentivize the private sector
to produce cures, will we give up our status as the world's
leading research and development country?
Dr. Holtz-Eakin. Yes. We are the leading biopharmaceutical
innovator on the globe, but that is not our God-given right. It
is due to the incentives that are in the system. And if we went
ahead with these proposals, there would be less incentive for
venture capitalists to fund startups that have generated these
advances. Those startups often then sell them to the larger
pharmaceutical companies. They would not be interested in
buying them because there would be no return. And the
innovation would dry up. It is a real threat.
Senator Grassley. Nonpartisan independent analyses show
changes to the noninterference clause hurt innovation and
cures. CBO says H.R. 3 would reduce the number of drugs
created. One CBO report says 38 fewer drugs this decade and
next. Another report from the University of Chicago says we
could miss out, with 342 fewer drugs in the next 20 years.
Should we be pursuing policies that produce less cures?
Dr. Holtz-Eakin. No. Directionally, everyone agrees there
would be fewer cures. The only debate is over how many and how
innovative they might be.
Senator Grassley. Thank you.
Senator Cardin?
Senator Cardin. Thank you, Mr. Chair. Let me thank all of
our witnesses who are here in our committee room, and those who
are with us virtually, for your help on these issues. I
appreciate the fact that we have an innovative health-care
environment here in America. The question is, are all of our
people getting access to it?
And I appreciate that we have a robust pharmaceutical
industry in America that we want to keep, but there is
something to be said about competitive pricing. There is
something to be said about those that are in this very
complicated structure that we have and the profits they are
making, and are they giving us value added for the profits that
they are making.
So we want to keep the innovative environment here in
America, but we also want to pay a fair price. And we recognize
that the technologies that are available are not available to
all in America.
So I want to ask the question--maybe I will start first
with Dr. Collins--and, Mr. Isasi, if you want to add some
comments to this, I would appreciate it.
Those who are underinsured, or uninsured, it is a problem
for them individually in getting access to our care. But it
also presents a problem for our system that causes disruptions
and inefficiencies in our health-care system. The Affordable
Care Act reduced the number of uninsured in America by about 20
million, if my numbers are correct. We still have uninsured in
America, and there are higher percentages in underserved
minority communities. We have the underinsured, and that is one
of the reasons why the expansion of Medicare to include dental,
vision, and hearing becomes an important issue to deal with the
underinsured.
My question to you is, can you give us some additional
tools that we can use to reach particularly those in
underserved communities, minority communities, to make sure
that they have adequate third-party coverage? What
recommendations would you make for us to be able to deal with
that gap we have in our system today?
Dr. Collins. Thank you, Senator. One, the Affordable Care
Act had a very significant impact on reducing disparities in
coverage across racial and ethnic groups. That happened in all
States, but the States that saw the biggest improvements in
coverage, and the biggest decreases in disparities, were
Medicaid expansion States. So expanding coverage in all States
would help further reduce those disparities that are endemic--
have been endemic to our system--and that the Affordable Care
Act has addressed so well.
On the underinsured side, this is an ongoing, chronic
problem in employer coverage and in individual market plans for
people who are outside of the cost-sharing reduction subsidy
threshold. So extending the cost-sharing reductions in
marketplace plans further up the income scale would help reduce
deductibles in marketplace plans, and allowing more people in
employer plans to access those enhanced protections in the
marketplaces would also address the underinsured issues that we
constantly see in employer-based plans, and which have been
growing over time.
Senator Cardin. Thank you for that.
Mr. Isasi, I want to perhaps expand on that a little bit.
Maybe you could share with us the impact from the coming
Medicaid redeterminations at the end of the public health
emergency, and how Congress can support individuals and States
to prevent a significant disruption and coverage loss.
Mr. Isasi. Thank you very much, Senator Cardin, for that
really important question. Many folks may be surprised to know
that currently, because of the public health emergency, States
are under what is called a maintenance factor requirement,
which means that they cannot disenroll people from Medicaid
because we are in a public health emergency.
When that ends--right now it is just extended until
January--but when it ends, States will have to go through a
redetermination process. What we know from history here is that
when that happens, thousands, and across the country millions
of people who are eligible for Medicaid, who should be getting
it, lose coverage.
They lose coverage because--really it is a paperwork,
administrative burden. All of a sudden they may have moved
home. They may have language access issues. They may not have
access to the Internet, so they cannot actually maintain their
enrollment.
And so it is really important that, as we move into this
period where the redeterminations will be made, that we do so
thoughtfully and carefully. And one of the most important
things we need to do, particularly for kids, is ensure that
they have continuous eligibility. It is currently an option for
States. We should make sure that all kids automatically have
continuous eligibility as the public health emergency ends, and
for 12 months--and also consider extending that to adults.
Senator Cardin. Thank you. I appreciate that.
Thank you, Mr. Chairman.
Senator Crapo [presiding]. Senator Cornyn?
Senator Cornyn. Thank you, Mr. Chairman.
Dr. Holtz-Eakin, my figures here indicate that about 90
percent of Americans have health insurance coverage. And I know
the goal of our friends, and frankly all of us, is to make sure
that everybody has access to quality health care. But one of
the problems with getting everybody health care is, we have a
large non-citizen population here in our country, roughly
estimated to be 11 million people who did not come here through
the regular legal process.
I believe, and I bet you do too, that legal immigration has
been one of the best things we have going in this country, but
illegal immigration creates a crisis like we are seeing at the
border right now, when we learned this morning that the number
of people detained since the Biden administration came into
being is about 1.7 million migrants. It is the most since 1986.
The reason I mention that is that the more undocumented, or
illegal migrants that come into the country, the worse our
uninsured or uncovered population problem is. Do you agree with
that?
Dr. Holtz-Eakin. That is correct.
Senator Cornyn. So actually, the policies of the Biden
administration are making the problem worse, not better.
Dr. Holtz-Eakin. Certainly that 1.7 million is an
extraordinary flow.
Senator Cornyn. Yesterday--you may have missed it because
you had other things to do--but we had the nominee for Customs
and Border Protection here in front of the committee, and I
asked him about the policies of nonenforcement announced by
Secretary Mayorkas, where he said that no one will be detained
or removed from the United States simply for the offense of
illegal entry into the country. And he agreed with me that that
was one of the pull factors that encourages people to come to
our country.
Would you agree that things that have been proposed by the
Biden administration like cash tax credits, things like
additional health-care coverage benefits, and other welfare
benefits, provide another part of the pull factors that
encourage people to come to the United States by other than
legal means?
Dr. Holtz-Eakin. Certainly, the pursuit of a better
standard of living, whether it be through illegal employment or
benefits from the government, is a big part of the pull factor.
Senator Cornyn. And I guess the solution by our friends
across the aisle is just to continue to use tax dollars to
encourage and incentivize illegal immigration by providing
those benefits. And I bet you believe that we have spent a lot
of money, and that our current level of debt as a result of the
pandemic is unsustainable, and that additional deficit spending
or debt is probably not a great idea. Do you agree with that?
Dr. Holtz-Eakin. I am concerned about that. We entered the
pandemic with a structural deficit that would put the U.S. on
an unsustainable fiscal trajectory. We have added an enormous
amount of debt so that it now exceeds the size of the economy
during the pandemic. And the proposed legislation--if all the
programs were put in place for 10 years, you would have $5.5 or
$6 trillion of spending, and we would have $2 trillion of
taxes. That is a structural deficit that is even larger and
accelerates the trajectory that is already so dangerous.
So I think that would be a misstep from the viewpoint of
macro policy and fiscal policy.
Senator Cornyn. And that is on top of the annual increases
in mandatory spending for entitlements, things like Medicare
and Social Security, that threaten ultimately the solvency of
those trust funds.
Let me ask you about the enhanced premium tax credit that
the administration is proposing. CBO says it would lead to a
reduction of 1.6 million people with employer-provided
coverage. In other words, instead of their employer providing
the coverage, then taxpayers would be paying for it.
All of these tax credits are paid to private insurance
companies, are they not?
Dr. Holtz-Eakin. Yes.
Senator Cornyn. And in fact the Affordable Care Act was one
of the biggest boons to insurance companies that Congress has
granted in decades. They benefited enormously, did they not?
Dr. Holtz-Eakin. They certainly did.
Senator Cornyn. Are you aware of the fact that of the
people who would be covered by the enhanced premium tax credit,
that 65 percent of those would have incomes over 400 percent of
the Federal poverty level? Twenty percent would be at 600
percent, which is $159,000 for a family of four. And 10 percent
would be at 700 percent of the Federal poverty limit. In other
words, families of four making $185,500 would receive this
taxpayer subsidy in the form of the premium tax credit.
Would that make our debt problems and our fiscal problems
worse, instead of better?
Dr. Holtz-Eakin. Yes. And as a whole, the proposal has that
character. These are large increases in the structural deficit
that we already have, and are a step in the wrong direction
from a fiscal point of view.
Senator Cornyn. Thank you.
Senator Crapo. Senator Bennet?
Senator Bennet. Thank you, Mr. Chairman. I appreciate
having a chance to ask questions of this panel. I want to thank
the panel for being here, and for your holding this hearing.
I am glad that we are here to talk about the importance of
health coverage and the need to achieve universal coverage,
which should be a priority for every member of the U.S. Senate,
I think. It has been over 4 years since we had a dedicated
hearing on coverages. Unfortunately, at that moment we were in
the middle of combating an unsuccessful threat to the
Affordable Care Act, and millions of Coloradans who have been
affected are deeply grateful that it failed. And on that note,
Mr. Chairman, I would ask consent to insert a longer statement
into the record highlighting the times that Senator McConnell
actually attempted to take away the Affordable Care Act.
Senator Crapo. Without objection.
[The prepared statement of Senator Bennet appears in the
appendix.]
Senator Bennet. Thank you, Mr. Chairman.
I would also like to ask consent to insert into the record
a new National Academy for State Health Policy analysis on 13
SBMs (State-based marketplaces) and the impact of enhanced
premium support authorized under the ARPA.
Senator Crapo. Without objection.
[The statement appears in the appendix beginning on p. 60.]
Senator Bennet. Thank you, Mr. Chairman. I appreciate it.
Again, this is a real opportunity to highlight the benefits of
our work on the ACA and how improvements have increased
coverage and reduced the cost to so many families and other
folks across the country.
I am glad that earlier this year the American Rescue Plan
made some changes to the premium supports for individual
marketplace plans that were identical to changes that I
proposed in my
Medicare-X Choice Act with Senator Kaine.
In Colorado, this made a significant difference. After the
law went into effect, there was a 50-percent reduction of
premium prices on average. And in fact, the law reduced premium
payments entirely for some people.
Nearly three in four customers on the Connect for Health
Colorado State exchange received financial support. For
example, a barista in El Paso County shared with me that the
improved support saved her $115 a month. She is able to
purchase a silver level plan and can now afford a crib and
other supplies for the baby she is expecting.
An uninsured couple showed up to an enrollment center in
Colorado and left in tears when they found out they could
obtain high-quality health insurance for $2.38 a month. There
are countless stories about how meaningful the support is, and
it is critical that this be made permanent.
So, Dr. Blumberg, your testimony had some critical data on
this premium support. Could you share with us how these premium
subsidies under the ACA, and further expanded under the
American Rescue Plan, have improved coverage and reduced cost?
Dr. Blumberg. Sure, Senator. By Urban Institute estimates,
the ARPA subsidy enhancements reduce the average household
spending on health care for families by 23 percent, for those
buying in the non-group insurance market. That is about $1,140
per enrollee.
For low-income enrollees, spending is reduced by 32 percent
on average. This obviously makes the insurance more accessible
for many people, and could decrease the uninsured by, in our
estimates, over 4 million people, if made permanent.
And lowering the premium costs through the premium tax
credit enhancements also provides them extra funds if families
should want to use that to buy coverage that has lower cost
sharing requirements than they would otherwise.
Senator Bennet. For the last 19 months we have faced an
unprecedented public health and economic crisis. Early in the
pandemic, there was deep fear that the uninsured rates would
skyrocket. For example, during the economic crisis in 2009,
14,000 people were losing coverage every single day. The
uninsured increased by 4.3 million. Although the type of
insurance may have changed, the uninsured rate remained steady.
And I believe it is a product of the ACA creating a more
resilient system.
Dr. Blumberg, I do not have much--and, Dr. Collins, as
well--I've only got about a minute left, but I know that both
of your organizations have done research on this. Do you agree
that the ACA played an essential role in creating this
stability?
Dr. Blumberg. Absolutely, because prior to the ACA, when
people lost their employer-sponsored insurance coverage, very
few of them would be eligible for financial assistance or other
coverage, and this time it was there through Medicaid and the
marketplace.
Dr. Collins. And I would agree with Professor Blumberg.
Senator Bennet. Thank you, Dr. Collins, and I will yield
back, Mr. Chair, the last 20 seconds to my colleague from
Louisiana.
Senator Crapo. Thank you, Senator.
Senator Cassidy?
Senator Cassidy. Thank you.
First I want to address--I am sorry she is not here--a
couple of things that Senator Stabenow said, making the point
that somehow Democrats are for coverage and Republicans are
not, and then worming in there something about an association
with segregation in hospitals. As a physician who worked in a
public hospital for the uninsured and dedicated my life to
bringing access to others who did not have it, I take umbrage
at that.
I also point out that the segregation in the south was by
Democrats who were the ones promoting that, and it was
Republican judges who fought back--and, that it was Dwight
Eisenhower that passed the first civil rights bill.
So, if we want to say that, oh, my gosh, we can just
promise the store and somehow pat ourselves on the back without
consequences, or without even regard to sustainability, oh, I
will give that to my Democratic colleagues. And if we want to
say, oh, my gosh, we were responsible for segregation but
somehow we are going to worm that in, insinuating that we were
not, I will maybe give that to you. But I am going to let you
know that that is not true. That history is wrong. And that
history is false.
And by the way, as long as we are speaking about
sustainability, Medicare is going bankrupt in 2026. We have a
bunch of people who want to expand coverage in Medicare, which
will further strain its finances, so that those who are on it
are less likely to get it.
Think about this: Medicare is going insolvent in 2026. And
when it goes insolvent, by law, it will only pay the providers
that which they currently receiving, which will result in
roughly a 25-percent decrease in what they shall receive. That
will be a crisis of access, and this is a program that the
other side is actually wanting to put others on, endangering
access to the seniors who are currently on Medicare.
Now again, if folks want to pat themselves on the back for
expanding access, let us dig a little big deeper. Republicans
are for access, but they are also for sustainability. If you
cannot sustain, then you do not have a program. You merely have
a talking point for your next election. And in this body, we
should be more about sustainability as opposed to a talking
point for the next election.
So I wish Senator Stabenow were here to hear that, because
I think it is something which I am glad to disagree with.
Now with that said, Dr. Holtz-Eakin, you point out that it
is not just about paying for care; it is about lowering the
cost and having better quality care, I presume, because
otherwise it is not sustainable. Correct?
Dr. Holtz-Eakin. That is right.
Senator Cassidy. So I was struck that, in Obamacare, there
was a big effort to put on the Cadillac tax to otherwise
restrain the amount of subsidized health care, because we knew
that subsidies of health care drive demand, which overall
drives up the cost. Is that a fair analysis?
Dr. Holtz-Eakin. Yes. That is right.
Senator Cassidy. But, Dr. Collins, you are speaking about
how we need to further subsidize health care. That actually
seems to go against the principle that the more the subsidy,
the more demand, which drives up the cost. And yes, you lower
the out-of-pocket to the individual, but for society you drive
up the cost, which therefore calls into question sustainability
unless you have unlimited dollars.
Dr. Collins, how would you respond to that?
Dr. Collins. Well, the new data out from the health-care
costs--and, Senator Cassidy, thank you for the question,
first--really does show that prices, not utilization, are
driving our cost problem in commercial insurance. So increased
coverage, that would be the thing----
Senator Cassidy. Let me ask you--just a second. I have
limited time. So prices, not utilization. But there is pretty
good data from the Rand Corporation--that is kind of a time-
honored study that has been shown elsewhere--that if you ask an
ER patient to pay a de minimis amount, you decrease
utilization. You decrease utilization without negatively
impacting health-care outcomes for those who do not have
chronic illnesses.
Now, is it fair to say that, in that case, totally
immunizing somebody from the cost of health care indeed
increases utilization, and therefore would increase demand and
increase total expense?
Dr. Collins. I mean, health insurance coverage is the most
important----
Senator Cassidy. But my question right there is, if you
totally immunize somebody from any cost-sharing whatsoever, you
do increase utilization, therefore demand, therefore total
expense. Is that not correct?
Dr. Collins. None of our insurance plans, or very few,
except for very low-income people, have zero cost sharing.
Senator Cassidy. In the silverization, so I am told, of the
Obamacare exchange policies, there are those who currently do
not have any cost share whatsoever. And, of course, I am
speaking of the particular of no cost share whatsoever. But at
some point cost-share becomes significant enough that
somebody--it impacts their behavior. Correct?
Dr. Collins. It does. But we know that high cost sharing
really discourages people from getting needed care. So the----
Senator Cassidy. I am not talking about high cost sharing.
I am talking about the general principle that the more health
care is subsidized, the more demand is generated, and the more
people become cost-insensitive to a higher price. The more they
are cost-
sensitized--and the sweet spot is where it does not discourage
needed care--the more it contributes to total global cost. Is
that a fair statement?
Dr. Collins. I think cost sharing is an important part of
health policies, particularly for care that is necessary. But
we do want to make sure that people have the right incentives
to get the care that they need.
Senator Cassidy. I am totally in acceptance with that.
Really we are talking about sustainability. I am sorry, I am
already a minute over my time, but I will just say that if we
do not have a sustainable system, everybody patting themselves
on the back at the expanded coverage is really just sewing the
seeds for a health and economic crisis. I say that because, as
a physician in a public hospital, we always ran out of money at
the end of the fiscal year. And at that point, we were denying
services, or postponing them to the next year.
There has to be sustainability built into whatever we do to
expand access. Thank you.
The Chairman. My understanding is that Senator Hassan may
be available now on the web. Is that true?
[No response.]
The Chairman. Senator Portman, are you out there in
cyberspace?
Senator Portman. I am. I am, Mr. Chairman; thank you.
The Chairman. Wonderful. Go ahead.
Senator Portman. I thank the witnesses for being here
today, and for the good information that they have provided. I
want to focus on a couple of issues.
One is what is in the reconciliation plan that is being
talked about. One thing is expansion of Medicaid. And this is
something that I think is important for all of us to take a
look at, because States like mine in Ohio did expand Medicaid.
We took on a lot of new expenses with that.
My understanding is that this is to create a Federal
Medicaid program that essentially will force those States that
have not expanded Medicaid to partake in a federally run,
federally funded health-care program.
First of all, is that fair to States like Ohio that took on
this cost themselves? The Medicaid program now in Ohio makes up
a significant amount of our spending every year. Prior to its
expansion, we were at about 24 percent of our total State
expenditures, and now it is about 38 percent of our
expenditures.
So this new program, as I understand, would be paid for by
Federal taxpayers, by the Federal Government, and it would go
to some of these States that chose not to expand Medicaid, with
no benefits for States like Ohio. And also, it is a blatant
disregard for State choice, which has been the subject of a
number of cases before the Supreme Court--that States have the
opportunity under Medicaid to make these decisions.
I guess what I would say is, to Dr. Holtz-Eakin, is this
the right way to go: taxpayers being forced to fund an
expensive expansion at the Federal level? By the way, the cost
is about $323 billion based on CBO, or $635 billion based on
other analyses. So between $300 and $600 billion, and again a
direct departure from the original intent of the Medicaid
program to allow States flexibility, not just to make this
choice, but once they have Medicaid under this Federal program,
the existing flexibility to test new and innovative ways to
deliver care would be gone.
For example, in Ohio we have a big issue with regard to
opioids, as many of you know, and so we have a substance abuse
disorder demonstration waiver that allows us to have the
flexibility to provide essential services like substance abuse
disorder treatment services that we use to battle the opioid
crisis in Ohio.
Apparently that kind of flexibility would not be
permissible. So, Dr. Holtz-Eakin, I know you have looked at
this. How would this new proposal inhibit the ability of States
to innovate?
Dr. Holtz-Eakin. Well, first of all, Senator, with regard
to that range in the numbers, I would just point out that we
are responsible for the high end of that range. And the
difference between CBO and the Center for Health and Economy is
really not in the proposals. It is the fact that CBO has, in
its baseline, anticipated expansions in Medicaid.
And so we do not do that. So all of the Medicaid here would
be new coverage, whereas CBO would only be doing the increment
above the anticipated expansions. And so there is not a great
mystery to why that range is there. It has to do with the
assumptions about the future in the CBO baseline.
With regard to the structure of the program, this is a
dramatic change in Medicaid. Medicaid has always been a
Federal-State partnership. And States have always been
responsible for the business model that they want to pursue in
their State.
And as I mentioned in my opening remarks, there is an
enormous track record of success in moving into managed care
organizations as a central plank of Medicaid. Competition among
them is even better. And that gives the opportunity to have the
basic approach of a capitated payment for cost incentives, and
quality metrics to make sure that we get high-value care. And
to my eye, there is no guarantee of that strategy in what is
being proposed in the reconciliation bill.
Senator Portman. Yes, because it pulls away that
flexibility. It is also--do you agree with me that States like
mine would be unfairly penalized by this if we have gone ahead
and made these decisions, and now the Federal Government comes
in in other States?
Dr. Holtz-Eakin. Yes, there is clearly a dissimilar
treatment with the Federal taxpayers picking up the entire tab.
Senator Portman. Let's talk about inflation for a minute.
Everybody is concerned about it, as we should be. Everything
costs more. The food we are buying at the grocery store, gas
that has a 42-
percent increase this year on average at the gas pump--
unbelievable. And inflation is being driven in part by the fact
that we have dumped so much stimulus into the economy. That is
what economists say. That is what Larry Summers warned about,
who was a former Democratic Treasury Secretary. The Federal
Reserve Bank of San Francisco just released a report saying
that the large spending plan passed, the $1.9 trillion earlier
this year, contributed to inflation.
So there seems to be a consensus among economists. Now we
are talking about a lot more money, $300 to $600 billion on
this Medicaid program, the Medicare expansions, hundreds of
billions of dollars depending on what you do. I know there is
discussion about various ways to change Medicare.
We talked earlier, I know--and I am a big supporter of the
Medicare Advantage programs in Ohio and elsewhere, because they
work to provide seniors with choices. But this would be a
Federal expansion of hundreds of billions of dollars, and the
Affordable Care Act expansion is about $200 billion, the last
numbers that I saw.
So these hundreds of billions of dollars start to add up.
And the question is, what is going to be the impact on
inflation? Can you give us a sense of that?
Dr. Holtz-Eakin. Well, certainly what we have heard in the
discussions about the structure, one strategy is to shorten the
amount of time that the spending programs are in place. So you
front-load all that spending, leave in place permanent tax
increases, and essentially back-load the pay-fors, and that is
a stimulus bill. The $1.9 trillion in March was poorly timed.
The economy was growing at 6.5 percent. It was way too big for
any macroeconomic problem we faced, and it was poorly designed.
This would be a repeat of exactly that exercise.
Senator Portman. So, bad timing in terms of spending this
kind of money--even if you believe that some of this was a good
idea--because of its impact on inflation.
The other concern I have in here is the home and community-
based services. I am a big fan of what it is called HCBS, which
is again, home and community-based services. If you look at
this proposal, it creates some problems. It does not give
States the opportunity to use it as flexibly as we would like.
Right now we have a long waiting list and a shortage of
qualified providers, and shortages of affordable and accessible
housing for these programs. And the funding here that is in
this proposal would make it even more difficult for some States
to use this HCBS proposal in a flexible way.
Do you anticipate that all States will get a big advantage
with this enhanced funding to bolster the HCBS programs, given
the new requirements that they would put on home-based care?
Dr. Holtz-Eakin. I think that is a real concern. My remarks
were about creating a high-value system. To do that, you have
to allow the flexibility to innovate and find cheaper ways to
reach quality outcomes. Getting the money with a whole bunch of
restrictions is at odds with that approach.
Senator Portman. Well, I think my time is ended, or close
to being ended, but I do think there are a bunch of bipartisan
proposals we should look at--including our Senior Care Act that
Bob Casey and I have, including the Ticket to Work program--
that are bipartisan and do make sense in this area. And my hope
is that we do not put too many restrictions on the home care
and community-based health care system, because that, to me, is
a way to save costs and improve care.
Thank you.
Senator Stabenow [presiding]. Thank you very much. We will
next hear from Senator Brown, and then Senator Toomey.
Senator Brown?
Senator Brown. Thank you, Madam Chair.
One of the witnesses just said that the Recovery Act passed
in March, signed by the President, was, I believe his words
were, ``a bad idea'' and, quote, ``poorly timed.'' I think the
100,000 retirees in Ohio who had their pensions restored, who
had earned them by negotiating at the bargaining table, and the
2.2 million children in Ohio and hundreds of thousands of
families who have benefited 4 months in a row--July, August,
September, October--from the Child Tax Credit of $250 or $300
and the poverty rate dropping by 40 percent, would disagree, if
I can say that.
Dr. Blumberg, I have a little bit of an unusual request.
Would you please reread the second paragraph of your written
testimony, the part beginning with ``Research has demonstrated
that the Affordable Care Act''--would you read that again?
Dr. Blumberg. Research has demonstrated that the Affordable
Care Act has increased health insurance coverage in the U.S.
among the nonelderly by more than 20 million people. The
enhancements of premium tax credits provided by the American
Rescue Plan Act have increased coverage further, albeit
temporarily, given that limited duration of the enhanced credit
period. These reforms also have increased the affordability of
insurance coverage and increased access to care for millions of
Americans.
Senator Brown. Thank you. Shout that from the highest
rooftops. For 20 million Americans, coverage was made more
affordable by the American Rescue Plan, which one witness was
just very critical of, which Democrats wrote and President
Biden signed into law earlier this year. We know that.
Dr. Blumberg, another quick question. If Congress extended
the enhanced subsidies from the American Rescue Plan and
expanded them to lower-income Americans in nonexpansion States,
how many Americans stand to benefit?
Dr. Blumberg. An estimate of my colleagues at the Urban
Institute is an additional 7 million people would have health
insurance coverage from that.
Senator Brown. An additional 7 million. Okay, thank you for
those numbers.
Mr. Isasi, thanks for being here and for all the work
Families USA has done over the years to ensure Americans have
high-
quality, affordable health care. A few ``yes'' or ``no''
questions, if I could do that in the last 3 minutes or so. If
you would, bear with me and answer ``yes'' or ``no.''
Would permanently extending funding for CHIP, the
Children's Health Insurance Program, help ensure coverage for
the children of working families for years to come?
Mr. Isasi. Absolutely.
Senator Brown. Would providing continuous eligibility--
``absolutely'' counts as a ``yes'' or ``no,'' so you can keep
doing that. Would providing continuous eligibility for kids and
post-partum individuals in Medicaid and CHIP help new moms and
their kids stay healthier and reduce disparities and improve
the continuity of their coverage?
Mr. Isasi. Yes, and you have been a tremendous champion on
this issue.
Senator Brown. Thank you.
Could adding a public option to the ACA, or allowing older
Americans to buy in voluntarily to Medicare before 65, help to
reduce disparities and give Americans more health coverage
options that they can afford?
Mr. Isasi. Absolutely. And the policies provide real
security, and also allow the government to finally start
addressing the pricing abuses that we are dealing with.
Senator Brown. Thank you for that.
Would extending ACA provisions allowing children to remain
on their parent's health insurance policies till age 26 to
CHAMPVA enrollees help to ensure that children of disabled
veterans have stronger coverage options?
Mr. Isasi. Absolutely.
Senator Brown. Would fixing the so-called family glitch in
the ACA help give working families more affordable coverage
options?
Mr. Isasi. Absolutely it would ensure that families are not
being unfairly penalized and held to an individual standard
instead of their family income standard. Really important.
Senator Brown. Thank you for that insight and illumination.
Last question. Would extending guarantee issue protections
to Medigap policies help provide seniors and individuals with
disabilities with more coverage options and greater out-of-
pocket protections for those individuals affected?
Mr. Isasi. One hundred percent. And it would ensure that in
Medigap, you could not be denied coverage for preexisting
conditions--that should be the law of the land in this country.
Senator Brown. Thank you very much.
Madam Chair, these ideas would help bring down health
insurance costs. As was illustrated, they would give families
more options. We ought to share those goals. Yet, my Republican
colleagues continue to oppose all of these policies. It should
be past time for them to end their decade-plus long attacks on
the Affordable Care Act.
We remember them year by year by year. Finally, work with
us on ways to give our constituents more coverage options, what
Democrats have been focused on from the Affordable Care Act a
decade ago to the American Rescue Plan. Today's hearing is an
opportunity to discuss ways to build on those efforts--not
subtract from them--like permanently funding CHIP, ensuring
continuous eligibility of children and post-partum individuals,
and extending the Enhanced Rescue Plan subsidy as a part of the
Build Back Better plan.
These are important steps forward that we could take, Madam
Chair, right now. I yield back my time.
Senator Stabenow. Well, thank you very much, Senator Brown.
That is a wonderful list of things that we should be focused
on.
We now will turn to Senator Toomey, and then go to Senator
Thune, who I understand had been bypassed at an earlier point.
So we will go to Senator Thune, and then Senator Casey.
So, Senator Toomey?
Senator Toomey. Thank you, Senator Stabenow. Can you hear
me okay?
Senator Stabenow. Yes.
Senator Toomey. Okay. Terrific. Thank you.
First, I want to register my continuing disappointment that
our Democratic colleagues are still trying to ram through this
reckless $3.5-trillion tax and spend bill, despite significant
reservations even from their own caucus. And, given the really
unprecedented scope and scale of this legislation, the
Republican request to hold hearings and a markup, I think at a
minimum, should be considered an obligation.
I am not aware of any plans to do that, and I suspect that
is related to the fact that this bill is going to do a lot of
damage. It is going to make millions of middle-class Americans
dependent upon government. It is going to raise taxes on
employers. It is going to diminish investment by increasing
capital gains taxes. It is going to give the IRS, despite its
history of abuses, access to financial information of ordinary
Americans. It is going to put U.S.-based multinationals and
their workers at a competitive disadvantage.
These are the kinds of things that ought to be scrutinized
in public and subject to debate and amendment. But apparently
that is not the path that we are on. So let me drill down on
one specific aspect of our Democratic colleagues' plan, and
that is, the expansion of Medicare that they are contemplating.
So, first of all, let us be clear. The Medicare trust fund
is on track to be bankrupt in 5 years. That is not even the
full story. CBO projects the program to have a $78-trillion
shortfall over the next 30 years--not billions, $78-trillion
shortfall--more than a $6-trillion shortfall just over these
next 10 years alone.
And now what we understand is our Democratic colleagues
want to expand benefits for a program that we know cannot keep
its current promises. And by the way, they want to include
coverages, including dental, vision, and hearing, for people
who, to a large degree, already have these benefits. So 42
percent of all Medicare beneficiaries are currently enrolled in
a Medicare Advantage plan, and the Medicare Advantage plans
have individual participants. Ninety-nine percent of them get a
vision benefit. Ninety-seven percent get a hearing benefit.
Ninety-four percent get dental benefits. So that is the 42
percent of people in Medicare Advantage.
By the way, about 99 percent of Medicare beneficiaries
either are in Medicare Advantage or could choose to be in
Medicare Advantage. So it is available to everyone already. So
what is the problem that our Democratic colleagues are trying
to solve?
It is certainly not to make the program sustainable. They
have not identified a problem in terms of lack of coverage or
availability of coverage. What it seems to be mostly about is
making taxpayers pay for coverages that are already in place or
available alternatively.
Dr. Holtz-Eakin, let me ask you this. I am trying to get a
handle on how we should think about the actual cost of this
Medicare benefit expansion. Democratic colleagues are saying
the cost is $350 billion over 10 years. But CBO thinks it will
be $80 billion per year, once all three benefits are
implemented. But we know there is this phase-in. So could you
tell us, what should we think about? What is the true cost of
this expansion of Medicare?
Dr. Holtz-Eakin. So I think the expectation is that this
benefit will be available indefinitely. And so the $80 billion
number over 10 years is the correct estimate of the cost--$800
billion.
Senator Toomey. And why do you suppose it is being phased
in gradually?
Dr. Holtz-Eakin. It is a way to make it appear cheaper, and
to make it fit into some sort of budgetary restriction.
Senator Toomey. So my understanding is there is another
proposal that is under consideration, which is to make
permanent the changes to the premium tax credits that occurred
on an entirely partisan basis under the American Rescue Plan.
And our Democratic colleagues expanded Obamacare to provide
more money to insurance companies, to those already in
Obamacare, and to make individuals eligible for the premium tax
credit regardless of income during 2021 and 2022.
And now just yesterday, CBO estimated the extent to which
these benefits will go to people who do not need the benefit.
Sixty-five percent of those set to receive more subsidies have
incomes over 400 percent of the Federal poverty line. And $26
billion will go to cover individuals who make over 700 percent
of the Federal poverty line.
So tell me--this is what CBO has told us, Dr. Holtz-Eakin.
Is it your view that these benefits are going to go to people
with substantial income and alternative ways of obtaining
insurance?
Dr. Holtz-Eakin. This is an unsurprising finding. The
proposal to get rid of the cap at 400 percent of the Federal
poverty level means it is targeted on people who are relatively
affluent. And this is what CBO is saying.
Senator Toomey. Does it strike you that a program that is
on a highway towards insolvency, running massive deficits,
should be expanded to include people whose income is many
multiples of the poverty line? Does that sound like a good idea
to you?
Dr. Holtz-Eakin. I think targeting all of these proposals
much more carefully at the low-income and needy would be a good
step in the right direction.
Senator Toomey. Thanks very much. I see I have consumed my
time.
Thanks, Madam Chairman.
Senator Stabenow. Thank you very much.
Senator Thune?
Senator Thune. Thank you, Madam Chair.
And I would like to associate myself with the comments from
Senator Toomey with respect to the process. I think this looks
like maybe the only hearing where we are likely to have an
opportunity where this committee can engage in a public forum
to discuss what are the sweeping policy changes and massive
expansion of government that Democrats have embarked upon. And
I think it should be noted that, even for bills that resulted
in a partisan outcome, this committee has always followed
regular order, debated and voted on amendments. And I think it
is a shame that, after promises of bipartisanship and
cooperation, even here today, we are facing policies that are
fundamentally changing the tax code, affecting the economy and
the way consumers access health-care coverage, on a completely
partisan basis. The American public ought to be included in
that conversation, and that to me suggests we ought to be
having a process that includes regular order, hearings, and a
markup.
Based on that recent CBO letter that Senator Toomey
referred to about the House version of the Democrats' tax and
spending spree, we now know that the proposed coverage
provisions would cost more than half a trillion dollars to
cover about 4 million people over 10 years. The CBO also
predicts this means that 2.8 million Americans are going to
lose their job-based coverage, which sounds like another ``if
you like your health-care plan, you can keep it'' falsehood.
Dr. Holtz-Eakin, could you talk about what drives this
shift away from private coverage into plans heavily subsidized
by the Federal Government? And what does it mean for the long
term?
Dr. Holtz-Eakin. This has been a concern since ACA was
passed. If you ran the numbers, the subsidies were already so
rich that for anyone up to about 300 percent of the Federal
poverty line, the employer could stop offering coverage, put
the individual into the exchange, give them a raise, and make
more money.
So the bottom line is, there was so much money on the table
in the exchanges that it was really an incentive for employers
to stop offering coverage. This is an increase in those premium
tax credits, and we are just seeing the same behavior in the
CBO estimates. You know, they have been watching this
carefully, and there are clear incentives for employers to stop
offering insurance--and in the process, to pay their workers
more and make more money simultaneously.
Senator Thune. Does the Democrat proposal to make the
expanded ACA tax subsidies permanent include anything to
prevent exchange premiums increasing? In other words, if
insurers increase premiums, do the taxpayer-funded subsidies
keep increasing too? And what does that mean, long-term?
Dr. Holtz-Eakin. The answer is ``yes.'' I mean, that is how
these subsidies are calculated. And this is the concern I have
about the discussion exclusively about access and coverage. In
the end, insurance is a financial part to shift the medical
bill around. The real problem is the national medical bill is
too big and delivers too low-quality care. So getting control
of the bill allows you to keep insurance premiums down directly
and does not require as much taxpayer subsidy.
So I think the sustainability issue that was raised by
Senator Cassidy, this is right where it hits.
Senator Thune. And just as a quick follow-up, is it correct
that these expanded taxpayer-funded subsidies could form plans
to cover elective abortions?
Dr. Holtz-Eakin. Yes.
Senator Thune. And that is, again, a violation of a policy
that has been in place literally for 50 years, since the early
1980s.
This year the administration allowed special enrollment
periods on the exchanges that lasted more than 6 months. The
Democrats are now proposing to create a continuous enrollment
period for individuals at certain income thresholds through
2024.
For years we have heard about issues of adverse selection
in the insurance markets. So what has changed?
Dr. Holtz-Eakin. Nothing. Our analysis indicates the
special enrollment periods would raise premiums because of the
adverse selection issue, and that would make this program more
expensive, on top of everything else.
Senator Thune. Let me shift gears for just a minute. And
again, I think Senator Toomey covered well what the Medicare
trustees have told us about the insolvency being faced by the
program in 2026, and the question of dramatically expanding
some of these fee-for-service program benefits and what that is
going to mean long-term in terms of the financial viability of
Medicare more generally.
But I want to ask you about your past experience as CBO
Director and just ask if you could perhaps provide some context
to the CBO report recently about Federal revenues for the first
time hitting $4 trillion, and increasing individual income
taxes 27.5 percent, 80 percent of that coming from the top 10
percent of earners, corporate-rate income taxes rising 75
percent to $370 billion.
With revenues coming in at historically high levels, what
would be the fiscal or economic impacts of raising taxes on
American workers and businesses?
Dr. Holtz-Eakin. The impact on the economy is decidedly
negative. We are recovering well from the near-term losses due
to the pandemic. We still have a long-term growth problem. The
proposals that are on the table would inhibit the accumulation
of intellectual property, capital, and other productivity-
enhancing investments, and that would be negative over the long
term for productivity, real wages, and the standard of living.
Senator Thune. Thank you.
Senator Stabenow. Thank you very much----
Senator Thune. Madam Chair, I have this--I want to include
this CBO letter in the record, if I might.
Senator Stabenow. Without objection.
[The letter appears in the appendix beginning on p. 164.]
Senator Stabenow. Senator Casey?
Senator Casey. Thank you, Senator Stabenow. I appreciate
our witnesses being here. Thank you for your testimony.
I wanted to start with, I guess, more of a comment on the
testimony of Mr. Isasi. On page 5 of your testimony--I am going
to read it into the record, because it is, I think, very
important for the American people to know this. You said on
page 5, ``An impressive research base now confirms that
Medicaid expansion''--and I am enumerating here, it is not in
your text, but--number one, saves lives; number two, protects
people from cancer and other serious diseases; number three,
helps combat the scourge of addiction; number four, prevents
bankruptcy; number five, saves money for State budgets; number
six, boosts employment; and number seven, keeps the doors open
in rural--I will say that again--rural hospitals, all benefits
of Medicaid expansion, a program much maligned by Republicans
in the Senate and the House, maligning it over and over again,
and they all voted against it, by the way, despite all the
benefits.
You also were talking about the Affordable Care Act and the
impact on people's lives in a very direct way. One expansion
that we are trying to undertake in this Build Back Better
budget is to make it more available at a State level, home and
community-based services for seniors and people with
disabilities.
That is never going to happen when the Republicans have a
majority because they are hostile, not just to making the
expansion, but they are hostile to the Medicaid program itself.
That is not an opinion. You just need to look no further than
their budgets. Budget after budget, especially during the Trump
presidency, cutting Medicaid, proposed cuts to Medicaid of $500
billion and up. In fact, there is a House budget proposal to
cut it by a trillion dollars over 10 years--Medicaid.
So if we are going to have home and community-based
services expanded, it is not going to happen with Republicans
because they are hostile to Medicaid itself, and Medicaid
itself makes that possible. So that is my comment for today.
But I wanted to turn to Dr. Collins. Dr. Collins, you had
extensive testimony about the considerable burdens that
families face when it comes to both the impact of premiums and
the impact of deductibles. How have Medicaid expansion and
marketplace policies both lowered costs to help families save
money when it comes to those burdens?
Dr. Collins. Thank you, Senator. There is a considerable
body of research, as Mr. Isasi's testimony indicates, that you
just quoted, showing that the expansions led to huge increases
in people's ability to access care. So lowering the financial
barriers to health care, lowering out-of-pocket costs across
the population--we know that has also occurred. And Medicaid
expansion in particular improves the financial protection for
low-income families, with an average decline of more than 4
percentage points of the share of people who are spending more
than 10 percent of their income out of pocket for health care.
This improved health-care access for people eligible for
Medicaid and improved their overall financial well-being. Low-
income families saw reductions in the number of unpaid bills
and the amount of debt sent to collection agencies, reduced
their use of payday loans, and resulted in declines in housing
evictions as a result. So these had dramatic spillover effects
into other areas of people's lives.
Senator Casey. Thanks for that. And I was going to turn
back to Mr. Isasi on the reference I made earlier to home and
community-based services. We all have had the real blessing and
the privilege of meeting folks along the way who tell their
story and inspire us to work on these issues. I think that is
true in both parties.
One of the people I met throughout the course of this
debate on these services was Kelly Barrett from Erie, PA. She
has cerebral palsy and she lives--fortunately, lives
independently in her own apartment for the last 4\1/2\ years.
She says the difference between having these services and not
having these services is, quote, ``the difference between life
and death.''
So I would ask you, what are the current barriers to
coverage for home and community-based services? And how would
investments in these services help Americans like Kelly
Barrett?
Mr. Isasi. Thank you very much for the question, Senator
Casey, and also for your championing these issues and health
for families and children. You are an amazing ally in this
work.
So home and community services, as you point out, these are
the key services that allow people who are aging, who are
disabled, with chronic conditions, to be able to stay in the
community and not end up in an institutional setting like a
nursing home. They allow people to continue to be independent
and to work, or to be close to their family. That is critically
important, but right now in this country we have such a
shortage. In fact, 800,000 people at least, almost a million
people, are on waiting lists all over this country to get
access to these services. It is a huge, huge need.
And as a result, we have people who are languishing and
people who are in institutions. This is critically important.
There is a deep investment we should make. The House bill makes
well over $100 billion of investment in these services. And by
doing this, we can really ensure that our elderly or disabled
and those with a chronic illness have a shot at living in the
community, being closer to families, having jobs, and things
like that.
Senator Casey. Thanks very much.
Thank you, Senator Stabenow.
Senator Stabenow. Thank you very much.
Senator Whitehouse?
Senator Whitehouse. Thank you, Madam Chair.
This first question is going to be about the public option
idea. Years ago, Senator Brown and I drafted the original
public option that we tried very hard to get into the
Affordable Care Act. And when we did so, there was a landscape
of Americans who had no health insurance.
The ACA has been a huge success. It has rolled out
effectively in almost all places, and it has changed the
landscape of who cannot get affordable health insurance.
What is the population, Mr. Isasi--and then Dr. Blumberg--
what is the population that you think, as we are designing a
public option here in the Finance Committee, we should make
sure we are attending to?
Mr. Isasi. So, from my perspective, I think that the first,
of course, are folks who are, for example, self-employed,
owning their own small businesses, who simply cannot get access
to high-quality global health insurance.
Senator Whitehouse. Even through the exchanges?
Mr. Isasi. Well, in some cases, depending on where they
live, they may or may not have access to high-quality
insurance. And let me just point out--and you know, given your
role of Insurance Commissioner in Rhode Island--one of the most
important things about a public option is, it finally allows
the government to get in there and demand a fair price and
address the pricing crisis that we are in.
Senator Whitehouse. Ben Franklin in his Almanac years ago
said, ``the best way to show that one stick is crooked is to
lay a straight stick next to it.''
Mr. Isasi. Beautiful.
Senator Whitehouse. And we rather hope that the public
option would be the straight stick.
Mr. Isasi. That is right. That is right.
Senator Whitehouse. And where should it be offered? Should
it be offered through Medicare? Should it be offered through
exchanges? How would you think it should be administered?
Mr. Isasi. Well, the answer to that question is, how can we
get it through the Senate and through the Congress? That is the
most important thing. But the bottom line is, it has to have
several dimensions.
The first is, is it available to everyone? The second is,
does it actually provide affordable high-quality insurance that
provides financial security? And that has to do with prices. As
you said, the stick right now in America is incredibly crooked,
right? And then the third piece is, the coverage has to be
available in all kinds of communities--rural communities, urban
communities. Things that have highly consolidated markets need
to have more competition.
Senator Whitehouse. Dr. Blumberg, anything to add to that?
Dr. Blumberg. Sure. Our analysis, Senator, about places
where the public option would have the greatest impact are
those areas that have either few insurers offering coverage in
the area and/or have very highly consolidated providers, so
that the prices for obtaining care are higher and, as a
consequence, premiums are higher.
So those areas are often areas that are not big population
centers, but not always. So, looking at where the prices are
highest, and where the competition in the insurer and provider
markets is below expectations and below where it would be in
other areas, are really the prime areas where the public option
would have the greatest impact.
You could----
Senator Whitehouse. Let me ask Dr. Collins this. In Rhode
Island, we have had two experiences. One was a Health Insurance
Commissioner who required insurers to focus on primary care
first. And that drove the market towards primary care being a
center point for service, as opposed to people hopping from
specialist to specialist.
And the second has been the Accountable Care Organizations
that have really done stunningly well in Rhode Island. They
have been national champs. One is Coastal Medical, a primary
care practice in Rhode Island, and the other is gathered
together as the Integra program, it is called, with Rhode
Island primary care physicians. And both of them have proven
that significant savings in cost per patient can be achieved by
improvements in care that lead to better health outcomes for
those same patients. And that has always been the sweet spot
that we have tried to hit. The Obamacare so-called ``triple
aim'' was focused in that space.
What should we be looking at now to try to maximize these
proven cost-reducing, quality-improving, better outcomes for
Americans strategies?
Dr. Collins. Thank you, Senator. I think what you highlight
is the innovation that is happening on this issue in States
across the country. Rhode Island is a standout. The other thing
that Rhode Island has done too is, they empowered their
Insurance Commissioner--your Insurance Commissioner--to review
rates, premium rates, and also review hospital rates.
So taking an active stance on the pricing problem that I
highlight in my testimony and that has come up repeatedly in
the hearing today--but we are also seeing lots of activity in a
lot of States. So I think it is an indication of what we can
learn from what States are experimenting with, watching the
States on the public option experiments. Montana is looking at
changes to their State employee benefit program on hospital
pricing. I think Rhode Island is a leader, and a lot of other
States are innovating in this space in very creative ways.
Senator Whitehouse. Thanks.
I will just close with a comment, if I may, Madam Chair,
which is that, once you free up doctors from having to march to
the fee-for-service treadmill and give them the ability to
adapt the way they treat patients to a patient-first way of
dealing with the patients, you then open up this arena in which
all three of those things happen at once. Patients are happier
and healthier, costs go down, and everybody wins.
So we need to continue to work on that. And I would note
that, in the quarrels about the Affordable Care Act, there were
no quarrels about these provisions. Nobody is against
Accountable Care Organizations. They are across the States.
They are doing really well, and we can make a lot of progress.
So thank you.
Senator Stabenow. Thank you so much, Senator Whitehouse. We
have seen the same results in Michigan; so, thank you so much.
Senator Hassan?
Senator Hassan. Well, thank you, Madam Chair. And I want to
thank the chairman and the ranking member for having this
hearing. And I want to thank the witnesses for being here
today.
I want to start with a question to Dr. Collins. Dr.
Collins, as my colleagues have mentioned throughout this
hearing, the COVID-19 pandemic led to a drop in health
insurance coverage, as many working-age adults lost their jobs
and, with it, their insurance. Fortunately, though, many who
lost their insurance had an opportunity to find new coverage,
thanks to the special enrollment period, increased subsidies,
and additional cost-sharing assistance for Affordable Care Act
marketplace plans that were included in the American Rescue
Plan last spring.
During the special enrollment period created by the
American Rescue Plan, almost 6,700 Granite Staters enrolled in
a new health plan, roughly double that of the same period in
2019 and 2020. Dr. Collins, we have talked about the numbers of
people who gained access to coverage through these provisions,
but can you speak a little bit about the impact that these
expansions have had? You talked in a previous answer about the
impact on working families' finances, but what has it meant for
families to be able to access needed health-care services
during the pandemic? What kind of services have they accessed?
Dr. Collins. Thank you, Senator; that is a great question.
First of all, we know that the majority of people who are
unvaccinated do not have insurance coverage. It is not because
the vaccines are required to be covered by insurance, it is
because people do not have a relationship with the health
system that insurance coverage affords them, so they are not
getting the information they need about vaccines.
It has been very important in terms of access to health
care, particularly for people who did get sick with COVID,
having the ability to get the care they need; having that
relationship with a physician. So it has been important not
only for COVID, but also across the spectrum of care that
people get, in ensuring access to that care.
Senator Hassan. Thank you.
Let me ask you a little bit more of a specific question. As
I think you probably know, New Hampshire, like some other
States, has been ravaged by the substance use disorder crisis.
And we have seen firsthand how Medicaid-covered behavioral
health care has improved access to treatment.
As Governor of New Hampshire, I worked to expand Medicaid
to ensure that Granite Staters would have access to the care
that they need, which includes treatment for substance use
disorder. Since that time, this access to coverage has been a
critical part of our State's response to the substance use
disorder crisis.
Dr. Collins, can you speak specifically to the important
role that Medicaid coverage has played in expanding access to
treatment for substance use disorder and improving health
outcomes?
Dr. Collins. Yes. Medicaid has been so important for
substance abuse issues--also, just mental health generally
across the population. States that have not expanded Medicaid
have denied this access to their residents, which has been a
critical part of our ability to address this crisis that we are
seeing in substance abuse and drug overdose deaths. The
marketplaces have also required insurance plans to cover mental
health and substance abuse services, which has also been a
critical part of this fight.
Senator Hassan. Well, thank you for that. I will just note
too the number of people I have talked to who have recovered
from their substance use disorder and then become employed, and
then gotten private insurance through their employment. So it
can be a win/win in a lot of different ways.
To Linda Blumberg: post-partum depression and other
perinatal health challenges can obviously exacerbate substance
use disorders. Expanded Medicaid and ACA plans have helped
ensure that mothers with substance use disorders have access to
the specialized care that they need. In New Hampshire,
Dartmouth Hitchcock's Moms in Recovery program provides access
to mental health professionals, child care, women's health
care, and medication-assisted treatment, among other supports.
So, Dr. Blumberg, can you speak to how expanded health
coverage has helped pregnant women and new parents impacted by
substance use disorders, as well as their children, through
innovative programs such as Moms in Recovery and other avenues?
Dr. Blumberg. Sure. Having health insurance coverage
through either Medicaid or private health insurance for mothers
has a very positive impact not only on their own health, but on
the health of their children. So, if the mothers are getting
mental health care and treatment, then that has positive
outcomes for the children. And there is a great deal of
research that supports that.
So it is also the reason why a lot of folks are interested
in looking at longer-term care for women post-partum, not just
for birth-related care, but also for general health care,
because of those outcomes.
Senator Hassan. Thank you very much, and thank you, Madam
Chair.
Senator Stabenow. Thank you so much.
Next we will hear from Senator Daines, and then Senator
Cantwell.
Senator Daines. Thank you, Senator Stabenow. Thanks to our
witnesses today.
President Biden and the Democrats sadly are pushing forward
a purely partisan, multi-trillion-dollar great big push towards
big government, a reckless tax and spending spree that I think
is going to reshape the foundation of this country. It is going
to create new entitlement programs. It is going to increase
Americans' dependence on government-subsidized, government-
controlled insurance coverage. It is also going to increase
Washington's control over the American people's lives. As they
have seen what has happened here in this city over the course
of the last year, they do not like it, especially when it comes
to medical decisions. And it is the last thing that Montanans
want to see happen.
The Democrats want to spend trillions on new and expanded
government programs, when we are already in desperate need to
fix the essential existing programs like Social Security and
Medicare. There are unsustainable promises of benefits that we
simply cannot afford. What the Democrats are trying to do and
pass here is the definition, I would say, of fiscal insanity.
I am deeply concerned that this bill would violate the
principles of the Hyde Amendment, despite a 45-year precedence,
and mandate taxpayer funding for abortion and new Federal
Medicaid-like entitlements through Obamacare.
Dr. Holtz-Eakin, for 45 years the Hyde Amendment has
prevented Medicaid and other Federal health programs funded in
the Labor/HHS appropriations bill from funding elective
abortions, and it has saved nearly 2\1/2\ million lives.
The Democrats' tax and spend bill would create a new
Federal health entitlement that mimics Medicaid. But rather
than being funded through Labor/HHS where the Hyde Amendment
would apply, it would receive an automatic, unlimited, and
permanent appropriation in the bill itself.
Dr. Holtz-Eakin, is it accurate to say that the Hyde
Amendment would not apply to this new Federal health
entitlement and therefore that abortions would be covered and
paid for by the Federal taxpayers under this program?
Dr. Holtz-Eakin. Yes.
Senator Daines. Interestingly enough, it was recently
suggested that the Democrats' $3.5-trillion tax and spending
plan would cost nothing, that there would be a zero price tag.
Now, I do not know where those folks went and studied math, but
I am a chemical engineer. I studied a lot of math. I am not
sure I would define that as being nothing.
Dr. Holtz-Eakin, can you help us make some sense of that
claim? And would the Democrats' tax and spending plan increase
Federal spending and grow the Federal Government's role in the
lives of everyday Americans, everyday Montanans?
Dr. Holtz-Eakin. I think the simplest presentation of the
budgetary impacts is to have each of the proposed programs be
made permanent so we can look at them over 10 years. That is
clearly the intent, in the end. And that is about $5.5 or $6
trillion worth of new spending.
The taxes that came out of Ways and Means are about $2
trillion, a bit above. So that is a huge structural deficit
that is being added to the existing structural deficit, largely
driven by Social Security and Medicare. So the scale is
enormous, but the scope is also enormous.
This is a climate bill, an education bill, a health bill, a
social safety net bill, a tax bill, education, housing--it is a
big intrusion into these parts of the economy.
Senator Daines. I think to try to simplify something that
can be a bit confusing right now, because it is a very fluid
situation, this is the largest spending bill in the history of
the United States of America. It is the largest tax increase we
have seen in 50 years. And of course we will see what the final
product is, but you brought up a very important point, and that
is, the underlying consequences here. If you want to see what
will happen in the United States, look at what is going on in
Europe at the moment, with natural gas prices up 500 percent,
coal up 200 percent, oil up 80 percent. That is the movie
trailer to what is coming to the United States of America if
they get these Green New Deal policies passed.
Dr. Holtz-Eakin. I am concerned about the inflation
outlook. We discussed that earlier. And certainly there is a
concerted effort to reshape the energy portfolio of the United
States, and the strategy that is embedded in this bill, and
more broadly, is to essentially run the electricity sector
solely on renewables, run everything in the way of factories,
homes, and vehicles on electricity, and somehow develop a
national grid we have never had to connect them. It is not a
low-risk bet, that is for sure.
Senator Daines. There can be severe consequences to not
getting this right, and we are seeing that, of course, right
now in Europe. They moved away from nuclear and coal, and they
are in a world of trouble.
The last question: the recent CBO analysis found that
health-care policy in the Democrats' tax and spend bill will
cause at least 2.8 million Americans to lose their job-based
coverage. Dr. Holtz-Eakin, could you elaborate on this analysis
and how it might impact taxpayers?
Dr. Holtz-Eakin. Well, as I mentioned earlier, the basic
phenomenon is that there is too much money on the table in the
exchanges, so much money that it is possible for employers to
stop offering health insurance and use those savings to give
their workers a raise, and send them off to get their insurance
in the individual markets, and actually make more money as a
firm.
That is strictly the result of the subsidies, being played
large. That was true of the original ACA for everyone up to
about 300 percent of the Federal poverty level. These are
richer subsidies, and so the same phenomenon is taking place.
Senator Daines. Thanks, Dr. Holtz-Eakin.
Thank you, Senator Stabenow.
Senator Stabenow. Well, thank you very much. I do need to
make one editorial comment at this point, and just indicate
that I do not consider asking billionaires to pay more than
zero a tax increase.
So, Senator Cantwell?
Senator Cantwell. Thank you.
I would like to ask Dr. Blumberg about a couple of things,
and this discussion is about a lot of aspects of the Affordable
Care Act. One that I authored was the basic health plan. The
basic health plan's final rules and regulations were written
and implemented in, I think it was 2015 or 2016, finally. The
basic health plan in New York covers approximately 800,000
people. In the essential plan, it costs less than $500 annually
for a family of four buying separate coverage.
If you compare that to, on the exchange somewhere, the
silver plan--basically these families are saving $1,000 in
premiums. So I know you mentioned some innovation. Obviously
the State of Washington is involved in a lot of innovation.
What can we do to get more people to look at the basic
health plan as a way to deal with the working-class population
above the Medicaid rate? And anybody else who wants to answer
that question may as well.
Dr. Blumberg. I am happy to talk about that, Senator. So,
from the perspective of experience, the basic health plan has
had a very targeted interest in the State of New York, and in
Minnesota, in terms of lowering the costs for private health
insurance plans for the very low-income people below 200
percent of the Federal poverty level, above the Medicaid
threshold. This has led to much higher participation, more
enrollment, more coverage in those States, clearly, from the
lower premiums. So extending the ARPA subsidies and making them
permanent moves toward that direction nationwide without States
having to make that jump into the basic health plan.
The basic health plan has a lot of positives for consumers.
Unfortunately, it also pulls people out of the risk pool, the
insurance pool, the marketplace, and separates them. And doing
so can have impacts on the premiums and the attractiveness of
the core marketplaces for insurers. So there are clearly a lot
of positives that have come in the States that have been able
to do it, but----
Senator Cantwell. What----
Dr. Blumberg [continuing]. It does have some down sides as
well. There are tradeoffs, to be sure.
Senator Cantwell. What proof points do you have on that?
Dr. Blumberg. Well, our analysis looks at the risks, the
health-care risks, and expected expenditures of individuals who
are eligible and enrolled in the marketplaces, and how that
would change on average when moving individuals who are up to
200 percent of the Federal poverty level out into a separate
program.
Not all of those under 200 percent of poverty are very
high-cost. They have medical care needs like others do, but
oftentimes they are healthier on average. So in some States,
moving them out of that insurance pool would both decrease the
size of the marketplace enrollment appreciably, and could also
increase the average health-care risk of people in the
marketplace.
By contrast, if you provide those more generous subsidies
for those low-income people as the ARPA extensions do, and
would if made permanent, with those that remain in the
marketplace up to 200 percent of poverty, then those people
stay in the pool and those pools have more strength.
Senator Cantwell. Yes. I am not clear what you are
suggesting on the pool, but I would say this: I disagree. The
notion that we are--the market never bundled up these people.
The market never served these people. The reason why we got
this passed is because people realized that for these people,
the market could not figure out a way to serve them. And so the
fact that New York and Minnesota took the chance and did it,
and now deliver more affordable health care for a population
that was hard to serve--and guess what, you found a price
point. And the answer was ``yes'' because of the price point.
So now, to continue this fallacy, this hooey, is what I
call it, just plain hooey that somehow we should continue to
subsidize very expensive silver plans when you could make a
market for people at a price point and deliver savings and
deliver more affordable health care, is just a big mistake.
And so people can keep talking all they want, but show me
on the exchange where you have an affordable plan. You look at
the basic health plan, you have an affordable plan.
I see one of the witnesses there--do you want to respond to
that?
Mr. Isasi. I just wanted to say that I think that the
concerns that my colleague is raising are real and important,
which is what is the interplay between exchange coverage and
the basic health plan options. However, what we have seen and
experienced, as you are pointing out, Senator, is that those in
New York and Minnesota, they only saw a 2-percent change in
costs as that was offered.
And to your point, what you are doing is, you are allowing
the State to negotiate on behalf of a very large group of
people and get really high-value coverage at lower costs. That
is a home run.
So I think the concern is real, but there has to be a way
that we can allow that to happen. And what we saw in New York
and Minnesota, the change was only 2 percent.
Senator Cantwell. Exactly. So my point is--this is why I am
saying it is hooey--if you look at the amount of money that we
are going to continue to be asked for, as we were in the last
COVID package--you know, hundreds of millions, billions of
dollars to subsidize expensive health insurance when you do not
have to. Why? Because you offered up a plan for a market that
was not very interesting to insurers. You made it interesting,
and you gave the States the right to negotiate on price. You
got a price, and the answer was ``yes.''
So 800,000 people in the State of New York have more
affordable insurance, and in Minnesota. So I would say that you
can contrast that to this experiment where people are trying to
say, ``Oh, here is what I am going to do; I am going to offer
you something on the exchange.'' It is not working to drive
down the costs. It is not.
So at least for this population--now I get it, if you start
talking about maybe 300 percent, or maybe 250, I can see where
people start saying that that impacts the marketplace. But when
you think about who these individuals are, they were people who
did not have insurance, worked for somebody who did not carry
insurance. You were trying to make them interesting in the
marketplace, and this, I would have to say, was a home run. And
the cost to all of us on subsidizing more expensive insurance
just is not--you know, we could take those same savings and do
what my colleagues down the dais were just talking about in
other reforms in health care, and get more traction.
Mr. Isasi. And I think our position is that those policies
are critically important. Not every State is going to be that
forward and really take that on and make that kind of
investment in building that basic health plan option. And it is
really important that, at the end of the day, every family has
access to high-quality insurance.
So we think both policies are really important. But
underneath all of this, I think, Senator, what you are pointing
out and being such a champion on is that we have to get much
more aggressive with our health insurers, to demand that they
negotiate good prices. And that is part of what the basic
health plan does. It gives volume, and gives real weight to
that negotiation so they can get in there and stop the pricing
abuse.
Senator Cantwell. Well, I will not disagree with you there.
I mean, that is what we liked about it. We liked the fact that
they could negotiate again in helping to create a market that
people were happy to bid in. I call it ``the Costco model.'' If
you are going to buy in bulk, people are happy to give you a
discount. And so this is a model that has successfully worked.
Okay, do I--am I over my time? I am over my time, I am
sure, thank you. I am going to submit a telehealth question for
the record. Look, I do not know that anybody has asked about
that. I really think it is very important that we also get very
granular about that.
Look, this is the information age. We should be taking
information about health care, getting very granular about it,
and coming up with better results. I think that is what we
strive to do all the time on this side of the aisle, on the
innovation side, and you have heard it from all of my
colleagues here, whether it is the ACOs, or patient-centered
health care, or the innovative work that the chair has been
doing on integrating mental health and behavioral health. Look,
these are all numbers.
On telehealth, we just do not--I think we do not have the
reimbursement rate that is truly incentivizing telehealth, and
we are going to be in an information age where we have to have
both the broadband and the reimbursement rate that allows
physicians to move to this area where it is cost-effective. But
I will submit a question for the record.
Thank you.
Senator Stabenow. Well, thank you very much, Senator
Cantwell, and I could not agree more on the basic health plan
and your leadership. Since we worked on the ACA together, it
has been incredible. So, thank you very, very much.
We now have virtually Senator Cortez Masto, Senator
Lankford, and I believe Senator Young.
So, Senator Cortez Masto?
Senator Cortez Masto. Thank you, Madam Chair. Thanks for
holding this hearing. Thanks to the witnesses for being here. I
have listened most of the morning to the testimony this
morning.
Let me just say this. The last 2 years of the COVID-19
pandemic have been an unbelievable test on our health system's
ability to respond to the dramatic changes in the economy. And
as many of you know on this panel, insurance rates in 2020
remained generally stable, which tells us that there was much
less disruption than we had anticipated.
But here is an important caveat: Congress played a key role
in shoring up so many of the various plans and programs where
individuals can get coverage. Our work to prevent families from
going uninsured during this period of time was critical. I
know. I come from the State of Nevada. We had the highest
unemployment rate at one point in time, 30 percent during this
pandemic. And we really needed to strive to make sure we were
bringing health-care relief during the middle of the health-
care pandemic to individuals, however we could. That is why I
so appreciate that we are getting into the details here about
health care in this country.
So, Mr. Isasi, let me start with you on the ACA tax
credits. Prior to the pandemic, small businesses employed just
under half the workforce in Nevada. These entrepreneurs are a
critical part of our State's economy, but many of them are too
small to offer health-care coverage.
The American Rescue Plan included a handful of temporary
subsidies to support the purchase of health insurance,
including an expansion of the ACA tax credit. Can you talk
about how these tax premiums, or these tax credits in the
Rescue Plan, might benefit small business owners and their
employees who are still in recovery from the disruption of the
pandemic?
And let me just add to this, Nevada is one of the States
still in progress. We are not running at full capacity here.
The hospitality industry is still stressed. The business
travelers are not back. The international travelers are not
back. We are still in the recovery mode.
So if you could address that, I would appreciate it. And if
you would also talk about gig workers, and the retail and
hospitality workers who move from job to job as well, and how
those tax credits, the tax credits we put in the Rescue Plan,
might be essential to help them?
Mr. Isasi. Thank you so much for the question. It is a
terrific and important one.
First and foremost, as you have heard, there are two main
provisions within both the American Rescue Plan and now what is
being considered in Build Back Better. The first, of course, is
to provide support for small businesses to provide health
insurance. Now in that regard, what we have to remember is, it
is the most volatile source of employer-sponsored coverage;
that is the hardest place. Small businesses oftentimes have the
hardest time offering coverage.
So we know, for example, if the American Rescue Plan
provisions were extended, that businesses and employers would
receive at least $5.1 billion in additional support for making
health insurance affordable. But that second prong is really
important to talk about. Not all small businesses will be able
to offer their employees coverage. And those employees I just
described--employees who are between jobs, or employees who
want to start new businesses--the second piece of this is
making sure that coverage in the exchanges is affordable.
And what we have heard is, this question has been asked and
answered. The subsidies have cut premium costs in half for
families--in half--and that allows for a lot more mobility, a
lot more economic development, as employees change jobs, lose
jobs, et cetera. So these are really important provisions
within both the American Rescue Plan and Build Back Better that
protect employees and employers.
Senator Cortez Masto. I appreciate that. Thank you.
And then, Dr. Blumberg, today there are more than 845,000
people enrolled in Nevada Medicaid. That is nearly one in three
Nevadans. Over the course of the pandemic, the State took on
more than 200,000 additional lives of Nevada's families who
lost their income and their job-based health insurance, and
really rely on the support that we were providing them.
This would not have been possible without bipartisan work--
and let me stress that--bipartisan work that we did to provide
States with an enhanced FMAP to keep folks on the rolls during
the public health emergency.
Dr. Blumberg, let me ask you this. Can you describe--this
may be difficult, but I am curious--can you describe how
different the rates of uninsurance and underinsurance might
have been had Congress not stepped in to support the Medicaid
programs?
Dr. Blumberg. Yes, it is a difficult question to answer.
Clearly, by our estimates, millions more people would have been
uninsured. We have done estimates of what the implications are
in making these changes, the changes to the subsidies that were
provided. If they were permanent, that would extend coverage by
about 4 million people. So I think between the presence of the
Medicaid expansion and the enhanced subsidies, we are talking
about, Nationwide another 4 million people uninsured during the
course of the pandemic, and maybe a little bit more than that
in the short term.
Senator Cortez Masto. Thank you. And I know my time is up,
but let me just stress this abour my State. Again, many of our
employees were furloughed. The COVID subsidies that we did, 100
percent were needed. The American Rescue Plan in my State was
supported in a bipartisan way, because of the nature of the
devastation from the health-care pandemic.
So it is important for us to work together to really
address the health-care needs of so many families and
businesses and entrepreneurs and individuals across the
country. We should be working together. But I will tell you
what, if we cannot get there in a bipartisan way, that is not
going to affect our efforts in looking at how we address the
needs of people in my State that will have a positive impact in
other States as well. So thank you.
Senator Stabenow. Thank you so much, Senator Cortez Masto,
for your incredible leadership on these issues.
We will now hear from Senator Young, remotely.
Senator Young. Thank you so much.
Dr. Holtz-Eakin, welcome to the committee. As my colleagues
on the other side of the aisle move forward with a very large
spending bill, $3.5 trillion--the largest tax and spending bill
in American history--I think it is really important that we
examine what I regard as the dangerous consequences this
legislation will have on hardworking Americans across the
country.
Repeatedly, throughout the 2020 election, and since taking
office, the Biden-Harris administration has pledged not to
raise one single penny in taxes on anyone making less than
$400,000 a year. That was a pledge, a promise. So I introduced
an amendment during our August vote-a-rama to ensure my
colleagues on the other side of the aisle had an opportunity to
go on record in support of the Biden tax promise. My amendment
received 49 votes from my friends on the other side of the
aisle, and it successfully passed the Senate 99 to 1. It now
binds this partisan budget package. Unfortunately, my Democrat
colleagues seem poised to violate the Biden tax promise by
proposing tax hikes on folks making less than $400,000.
According to the nonpartisan Joint Committee on Taxation,
over 15 percent of taxpayers earning between $75,000 and
$100,000 a year will experience a tax hike in 2023. By 2027,
that number will jump to more than 50 percent of taxpayers.
So with that said, Dr. Holtz-Eakin, can you please speak
for a moment on how the House Democrat package will raise taxes
on people earning less than $400,000 per year?
Dr. Holtz-Eakin. Well, certainly. There are really two
mechanisms in play. One is simply the direct impact of some of
the tax proposals, most notably taxes on cigarettes, e-
cigarettes, where the buyers will have incomes under $400,000.
So they get a direct tax increase.
The second mechanism is the result of the fact that some
taxes will be shifted onto workers, and those workers will be
in the sub-$400,000 range. So for example, if you raise the
corporation income tax, a large body of research shows that
that tax cannot be borne entirely by shareholders or they will
get an inadequate rate of return that cannot be borne entirely
by customers, because that is a big price increase. That prices
the firm out of the market, so it gets shifted back to workers
in the form of lower wages.
The Joint Committee has recognized this in their scoring of
tax proposals for a long time. And so, the large increase in
the corporation tax rate, the larger minimum taxes on global
earnings, all of that will have impacts on people making less
than $400,000.
Senator Young. Well, thank you for explaining that. It
gives some academic and economic respectability to the
sentiment I hear on the ground in Indiana from regular people,
who seem to understand that their taxes are going to go up
should some variant of that House Democrat package pass the
United States Senate and be signed into law.
Dr. Holtz-Eakin, I really am grateful for your perspective
on how the Medicare program's coverage gaps for cutting-edge
innovations and medical technology impact access for patients
today and also impact innovation in the future.
I was disappointed with CMS's recent proposal to repeal the
Medicare Coverage Innovative Technology rule 3 months prior to
implementation. CMS developed MCIT in part due to concerns that
delays and uncertainty in Medicare coverage limited seniors'
access to important new and innovative technologies.
How could the delay in CMS's coverage and reimbursement
process impact innovation of lifesaving diagnostic tools,
preventive technologies, and treatment, Doctor?
Dr. Holtz-Eakin. So the rule is intended to provide
automatic CMS reimbursement for those therapies that got a
breakthrough designation by the FDA. And in doing so, you would
accelerate the movement of that product into earning some
revenue. That has clear incentives on innovation. If you have
an innovation that never generates any revenue, you are not
going to pursue that. If the revenue's impact is years and
years into the future, you might not be able to survive, so you
will not undertake that innovation. So, if you can accelerate,
essentially the marketability of an innovative technology, or a
pharmaceutical, or a device, that is going to help innovation.
Senator Young. Do you have--very briefly--do you have any
recommendations on how CMS could revive the proposed rule,
rather than kill it outright?
Dr. Holtz-Eakin. I think the concern that arises is that
every therapy that gets a breakthrough designation
automatically gets reimbursement. It is not obvious what the
appropriate reimbursement is. So I think that what CMS should
have the ability to do is to--essentially, the default is in,
but if they can make the case that it will be too costly, or
they do not know how to reimburse it, they could opt some
therapies out.
Senator Young. Thanks so much.
[Pause.]
Senator Young. Mr. Chairman?
The Chairman. Yes, I think----
Senator Young. My time has expired. My apologies.
The Chairman. I thank my colleague. And I appreciate
particularly Senator Stabenow filling in for so much of this,
and Senator Crapo's courtesy.
I believe our last questioner will be Senator Lankford.
Senator Lankford, are you out there in cyberspace?
Senator Lankford. I am, Mr. Chairman.
The Chairman. Wonderful. Have at it.
Senator Lankford. Thank you. And last means final for
everyone who is on the panel as well. Thank you for being on
the panel, for answering questions from us remotely, and
physically. We appreciate your engagement on this. There is a
lot of conversation that needs to happen on the health-care
front.
I have worked across the aisle on health-care solutions,
trying to work to find innovative market-based solutions.
Senator Brown and I have worked on issues with DIR fees, which
are very significant in the drug pricing issue and keeping our
independent pharmacies open. I have worked with Senator
Menendez on the issue of tiering for drugs, also Senator Cardin
on that issue of tiering for drugs, making sure that new drugs,
when they come out, actually end up on the right tier to have
the right pricing to be able to help the consumer. There are
lots of market-based things that need to be done in this.
Dr. Holtz-Eakin, I have a question for you--you have raised
several of these issues. What do you see as the key market-
based solutions that are not going to be a government-
controlled health-care system that could actually bring lower
prices and more innovation?
Dr. Holtz-Eakin. I think the central set of attributes is
to have it be highly decentralized, so the competition takes
place on the ground with recognition of the population health-
care districts.
It should involve essentially capitated payments to
insurers and managed care organizations and give them strong
incentives to manage their costs and not let them become large.
But there has to be with that a set of quality metrics that are
easy to implement, and which allow observation of whether we
have high-quality outcomes. And then you are moving the system
towards something that pays for value, does so in a way that is
suitable for the population characteristics--it might even
include things outside of the traditional range of health
services. You will get better health, and you will have
incentives to keep costs down.
Senator Lankford. Do you see a good example of that
currently in our system?
Dr. Holtz-Eakin. There have been attempts at this kind of
thing all through the system. So we have seen bundles in
traditional Medicare, where the idea is to look at a set of
services and provide a bundled payment for that. Clearly, you
have to ensure the quality of the outcome. Medicare Advantage
is essentially one big bundle. And with the Medicare Advantage
stars program, we have quality metrics. I think we could
improve on that dramatically in the years going forward, and
that would be a good place to start.
Because with Medicare being such an important payer in the
system, it is an important determinant of practice patterns.
And using Medicare Advantage to drive a high-value delivery
system that differs across the country, I think is a very smart
strategy.
Senator Lankford. Dr. Holtz-Eakin, none of us really know
what this proposal is, this reconciliation proposal. It is
sometimes $3.5 trillion, it is sometimes $2 trillion, it is
sometimes $1.5 trillion. It has been a moving targets on
things, so it has been difficult to be able to articulate some
of the issues that are in it. From what you have seen in the
public arena, how do you think that some of the proposals would
affect R&D for the future in the United States for new drugs,
new treatments, new therapies, new procedures?
Dr. Holtz-Eakin. Well, certainly the tax proposals would
hit, directly, a lot of the firms, and that would be a drain on
their ability to pursue R&D. Some of the individual proposals
on capital gains top rates are likely to affect the venture
financing that is such an important part of the
biopharmaceutical ecosystem and provides the financing for the
startups that have been leaders in the innovative new oncology
drugs, in particular recently.
So I would worry about the impact of these proposals--which
are sort of viewed as just benign ways to raise money--what
they will do to the culture for investments, innovation, and
the accumulation of intellectual property in the United States.
Senator Lankford. So again, none of us have seen text on
this. We are all just reading bits and pieces of it back and
forth on the reconciliation proposal. We have had an agreement
for decades across the government that we do not use Federal
dollars, Federal taxpayers' dollars, to pay for the taking of
life--that is, an abortion. We use health-care dollars to
provide for protecting life, not actually taking life.
So we have had what we call the Hyde Amendment--which you
know extremely well--since the 1970s that has said we do not
use Federal tax dollars to take the life of children. This
seems to be a method to try to get around that and to actually
now take Federal tax dollars for the first time and use them
for abortion funding. Is that your best understanding, that the
new mechanisms being put in place in this reconciliation
proposal will allow for Federal tax dollars to be used for the
taking of life in abortion?
Dr. Holtz-Eakin. Yes.
Senator Lankford. How far do you think that expansion could
go, based on what you have seen?
Dr. Holtz-Eakin. I hate to speculate. As near as I can
tell, at the moment it is centered in the proposal to have a
Federal
Medicaid-like program in the States that did not expand
Medicaid, and that program begins with 3 years of participation
in the individual market for those targeted beneficiaries. It
is certainly at least that.
And as you say, until we see the final legislative text, we
cannot know exactly where the boundaries might lie.
Senator Lankford. Well, that will definitely be an
incentive to--obviously I am very supportive of health care,
and have been very, very engaged on community health centers
and Federally Qualified Health Centers, and for all kinds of
health-care innovation. We need a lot of innovation. We need a
lot of marketplace ideas. But I have been strongly opposed to
using health-care dollars to actually take the life of
individuals, of children.
I would like to be able to see our health-care dollars
invested towards actually protecting life in the future.
So, Mr. Chairman, thank you for allowing me to be the last
questioner and to be able to jump into the conversation today.
Thanks again to all the witnesses.
The Chairman. We are doing--and let me thank our witnesses
for being so extraordinarily patient. We are waiting for
Senator Warren. I am supposed to be in another place, and
Senator Warren will finish it up and will liberate you all.
[Pause.]
The Chairman. Okay, we are continuing to await Senator
Warren.
Apropos of this question of costs and the critiques of
them, clearly expanding health coverage to the uninsured is
important. And we also have to help families that have coverage
who are getting crushed by health-care costs that drain their
pocketbooks. And I am so pleased that Senator Warren is here. I
am going to finish my question.
And, Senator Warren, with your leave, when I finish this
question, we will allow you to ask your questions and close the
hearing. Is that acceptable to you?
Senator Warren. Very acceptable. Yes.
The Chairman. Okay. Here is the question. Apropos of you,
Dr. Collins, these health plans with sky-high deductibles, and
monthly premiums that are also in the stratosphere, can
threaten people's access to care and are not worth the paper
they are written on. If you want to reduce these out-of-pocket
costs for families and make sure coverage is meaningful, we
need to address the underlying costs here, which are the high
prices we pay in this country for health care. We have been
talking about that for upwards of 3 hours.
And I just want to have Dr. Collins answer this question,
and then I am going to turn it over to Senator Warren.
What does it mean to these low- and middle-income families
when we see the deductibles and out-of-pocket costs account for
a larger and larger share of their income? Dr. Collins?
Dr. Collins. Thank you, Senator Wyden.
First of all, spending more on your premiums already
burdens households that are struggling with the housing prices,
food prices, child care prices. So that just adds to their
burden at the front end.
But then having high deductibles also impacts people's
ability to access needed health care. And we know from years
and years of surveys that high deductibles lead people to make
decisions that go against their best health-care interests.
The other dynamic that is happening is--and this has also
been consistent--high deductibles lead people to be unable to
pay their bills and to accumulate debt over time. And that has
long-running financial implications for people, including
having their credit scores ruined; accumulating credit card
debt; depleting their savings; not being able to pay for food,
heat, or their rent.
So this is really an affordability crisis for lower-income
people that we do need to address, first by protecting people,
but then also addressing the underlying problem, which is high
prices in the commercial insurance markets.
The Chairman. Very important, Doctor. And the last point I
am going to make is, Donald Trump's effort to repeal the
Affordable Care Act would have more than doubled the
deductibles under the proposal as written. And you got a sense
from Dr. Collins about the pain that people are already going
through when they are purchasing deductibles. Another good
reason why it made sense to resist that Trump effort.
Senator Warren, we have been 3 hours into it. It is very
fitting that you wrap it up. And, after you have completed your
questions, I appreciate your adjourning the Finance Committee.
Senator Warren. I will do that. Thank you. Thank you very
much, Mr. Chairman.
As many people have talked about today, health-care
coverage continues to be out of reach for millions of
Americans. And right now Congress has this historic opportunity
to take a big step in the right direction by passing the Build
Back Better agenda to close the Medicaid coverage gap; to
expand Medicare coverage for dental, vision, and hearing; to
tackle affordability; and more.
So let me start with you, Dr. Blumberg. You have written
about many of these proposals. Now, if all of the remaining
States expanded their Medicaid programs, how many of the
uninsured people who would become eligible for health-care
coverage have incomes below the poverty line?
Dr. Blumberg. My colleagues estimate about 3 million of the
newly eligible uninsured in those 12 States would currently
have incomes below poverty.
Senator Warren. Okay. And unless a person in this coverage
gap gets a job that offers them health insurance, or unless
they move to another State that has already expanded Medicaid,
do these people have any other coverage opportunity?
Dr. Blumberg. They do not have adequate and affordable
other opportunities, no.
Senator Warren. Okay. All right, so 3.2 million people
below the poverty line--they do not have any other coverage
options. The people caught in the Medicaid coverage gap are not
boxed out of care because they are too wealthy, or because they
have some other option available to them. Instead, these
individuals, 60 percent of whom are people of color, have no
health-care coverage because they are poor. That should not
happen in America.
So, Dr. Blumberg, if the 12 States that have not taken up
the Medicaid expansion decided to do so tomorrow, how much new
Federal money would the Federal Government be expected to find
to finance these expansions?
Dr. Blumberg. It would cause no increase and no need for
revenue because it was already covered by the Affordable Care
Act of 2010.
Senator Warren. So this has already been budgeted for?
Dr. Blumberg. Correct. There is a lot of money left on the
table that has not been used by those States since 2014.
Senator Warren. Okay. Money left on the table. If Congress
passed a bill to close the coverage gap and found new money to
cover the costs, would Congress be paying twice to cover this
same population?
Dr. Blumberg. Essentially, yes, that is the truth, since it
was already funded--the same people and the same benefits.
Senator Warren. All right; thank you.
You know, this is an important point to focus on,
especially in light of the CBO estimates that were released
yesterday. To anyone saying that it is too expensive to cover
the Medicaid coverage gap, or that we can only afford to cover
this gap for a few years, I have some good news for you.
Congress has already paid to insure this population. And it is
time for the Federal Government to deliver these individuals
the coverage that they have long been promised. And there is no
reason to pay for it a second time.
Now, Mr. Isasi, last year 9.5 million Medicare
beneficiaries said that they could not access dental, vision,
or hearing services that they needed. Can you just give us a
little bit of a description about who those people were?
Mr. Isasi. Absolutely. Thank you for the question.
So we are talking about--it is really important to say
this--three times as many folks are having trouble who have
incomes below $10,000, than the people who have higher incomes.
These are--in large, large part we are talking about the most
vulnerable Medicare recipients. Also, it is many, many people
of color compared to White Medicare beneficiaries; twice as
many Black beneficiaries who cannot see a dentist and one-third
as many Hispanics. Twice as many Black adults have lost all
their teeth, as compared to the national average. And three
times as many Mexican-American older adults have untreated
tooth decay.
So this is very much an issue for some of our most poor,
vulnerable, and beneficiaries of color.
Senator Warren. And they are the ones who would benefit
most if Medicare were expanded to cover vision, dental, and
hearing?
Mr. Isasi. Without a question. Without a question.
Senator Warren. Thank you very much for this. Low-income
Americans, and people of color, will disproportionately benefit
from Medicare dental, vision, and hearing coverage. Of the
millions of Medicare beneficiaries who do not have access to
these services, about 70 percent have said it is just because
they cannot afford it.
The best approach to getting universal coverage is through
a
single-payer system, but we should not overlook how powerfully
important the provisions in the Build Back Better agenda are.
We have a historic opportunity to make a real difference in
people's lives, and we should do that.
Mr. Isasi. I could not agree more.
Senator Warren. Thank you very much.
Senator Scott wishes to ask questions? Is that right? Oh,
he wants to enter--sorry, I did not read the note--wants to
enter documents into the record. Without objection, so ordered.
[The documents appear in the appendix beginning on p. 157.]
Senator Warren. And with that, I close this hearing. We
will keep it open for questions for the record, and comments.
Thank you very much.
[Whereupon, at 1:08 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Michael F. Bennet,
a U.S. Senator From Colorado
Mr. Chairman, I want to thank you for holding this hearing. I am glad
we are here to talk about the importance of health coverage and the
need to achieve universal coverage, which should be a priority for
every single one of us on this committee.
It has been over 4 years, September 12, 2017 to be exact, since we've
had a dedicated hearing on coverage. Unfortunately, at that moment we
were in the middle of combating an unsuccessful threat to the
Affordable Care Act (ACA), and millions of Coloradans who would have
been affected are deeply grateful it failed. One Urban Institute study
found that under just partial repeal of the ACA, similar to legislation
vetoed by President Obama in January 2016, 588,000 Coloradans would
have tragically lost their insurance.\1\
---------------------------------------------------------------------------
\1\ http://www.urban.org/sites/default/files/publication/86236/
2001013-the-implications-of-partial-repeal-of-the-aca-through-
reconciliatio_0.pdf.
This hearing is essential to remind the American people of how the ACA
led to increased health insurance coverage for millions of Americans
while reducing the cost and improving the quality of plans available on
the individual market. The American Rescue Plan Act (ARPA), signed into
law earlier this year, expanded the Advance Premium Tax Credits (APTCs)
identical to provisions in my Medicare-X Choice Act, which reduced the
cost of health insurance for individuals and families purchasing non-
group health insurance. Although I believe there are still steps we
should take to achieve universal health coverage, like establishing a
public option to finish the work of the ACA, I want to make it
abundantly clear that it has been Democrats who have taken major
---------------------------------------------------------------------------
legislative steps to improve coverage for Americans.
Under the leadership of Senator Mitch McConnell and President Donald
Trump, there were only efforts to reduce coverage, increase the
availability of subpar health insurance, and remove patient protections
like allowing insurance plans to deny coverage for preexisting
conditions. In fact, Mitch McConnell has forced the Republican caucus
to vote countless times to undermine the ACA and the needs of
constituents across the country.
Notably, five times proposals were brought to the floor, and five times
those bills failed to become law:
(1) In February 2011, Senator McConnell proposed an amendment to S.
223, the FAA Air Transportation Modernization and Safety Improvement
Act. This amendment would have prevented the ACA from being implemented
in its entirety. It failed by a vote of 47 to 51.\2\
---------------------------------------------------------------------------
\2\ https://www.senate.gov/legislative/LIS/roll_call_lists/
roll_call_vote_cfm.cfm?congress=112&
session=1&vote=000.
(2) In December 2015, Senator McConnell led the effort to pass the
Restoring Americans' Healthcare Freedom Reconciliation Act of 2015.
This legislation would have repealed premium support, Medicaid
expansion, and the individual and employer mandate penalties, among
other provisions. The bill passed by a vote of 52 to 47.\3\ President
Barack Obama rightfully vetoed this legislation.
---------------------------------------------------------------------------
\3\ https://www.senate.gov/legislative/LIS/roll_call_lists/
roll_call_vote_cfm.cfm?congress=114&
session=1&vote=00329.
(3) In July 2017, Senator McConnell, with the full support of President
Donald Trump, brought to the floor a series of proposals to undermine
the ACA. The first Senate proposal, the Better Care Reconciliation Act,
repealed and replaced the ACA with a proposal that would increase the
uninsured by 22 million.\4\ The proposal failed by a vote of 43 to
57.\5\
---------------------------------------------------------------------------
\4\ https://www.commonwealthfund.org/sites/default/files/documents/
media_files_publications
_issue_brief_2017_jul_ku_bcra_economic_effects_states.pdf.
\5\ https://www.senate.gov/legislative/LIS/roll_call_lists/
roll_call_vote_cfm.cfm?congress=115&
session=1&vote=00168.
(4) Just a day later, Senator McConnell and President Trump continued
their efforts to repeal the ACA by putting forward a budget resolution
amendment titled the Obamacare Repeal Reconciliation Act of 2017. This
would have repealed Medicaid expansion and premium support in 2020,
right as the Coronavirus Disease 2019 unexpectedly created a public
health and economic crisis. This amendment failed by a vote of 45 to
55.\6\
---------------------------------------------------------------------------
\6\ https://www.senate.gov/legislative/LIS/roll_call_lists/
roll_call_vote_cfm.cfm?congress=115&
session=1&vote=00169.
(5) Finally, after a few days of further discussion on a wide range of
careless proposals, Senator McConnell put forward his final proposal,
the Health Care Freedom Act of 2017, a ``skinny'' repeal of the ACA,
without a replacement, that would have reduced coverage for 15 million
Americans.\7\ This failed by a vote of 49 to 51.\8\
---------------------------------------------------------------------------
\7\ https://www.cbo.gov/system/files/115th-congress-2017-2018/
costestimate/s.a.667.pdf.
\8\ https://www.senate.gov/legislative/LIS/roll_call_lists/
roll_call_vote_cfm.cfm?congress=115&
session=1&vote=001.
Over and over, Senator McConnell took actions that communicated that
the party he leads will not work to increase coverage, often burdening
---------------------------------------------------------------------------
the very individuals that they represent.
Time and time again, Democrats have worked to improve and increase
coverage for all Americans, regardless of income, geography, race/
ethnicity, or any other background.
I will continue work with my colleagues and fight to protect the ACA,
the improvements made under the ARPA, and take further actions, like
creating a public option, to achieve a shared goal of universal
coverage.
This hearing is just the next step to accomplish this, and I thank my
colleagues and the witnesses for their efforts in realizing this goal.
______
National Academy for State Health Policy
State-Based Marketplaces Report Savings and Growth for Older Adult and
Moderate Income Populations
_______________________________________________________________________
The American Rescue Plan Act (ARPA) had a significant impact on the
ability of Americans to access and afford health insurance through the
federally facilitated marketplace and state-based exchanges across the
country. ARPA's dual policies of enhancing existing tax credits used to
purchase coverage and providing first time tax credits for moderate
income households (those above 400% of the federal poverty level (FPL))
enabled millions to access \1\ coverage through marketplace plans since
the law's enactment in March of 2021.
---------------------------------------------------------------------------
\1\ https://www.hhs.gov/about/news/2021/09/15/biden-harris-
administration-announces-2-8-million-people-gained-affordable-health-
coverage-during-2021-special-enrollment.html.
The National Academy for State Health Policy (NASHP) recently analyzed
how ARPA has impacted enrollees in state-based health insurance
marketplaces (SBMs) across different age and income groups.
Specifically, NASHP examined households with individuals over 55 years
of age for whom health insurance is often cost- prohibitive because of
higher charges associated with age (known as age rating) and
---------------------------------------------------------------------------
individuals with income over 400% FPL who newly qualify forsubsidies.
To conduct this analysis, NASHP collected data from 13 SBMs operating
in CO, CT, DC, ID, MD, MA, MN, NV, NJ, NY, PA, VT, and WA. This
analysis was conducted as part of NASHP's work with the State Based
Exchange Leadership Network--a consortium of state leaders and staff
operating the SBMs. Data are current as of September 2021, except where
otherwise indicated.
Increased Enrollment and Affordability for Pre-Retirees in SBM Plans
Over a half million (552,069) 55+ year-olds are currently enrolled in
plans through the 13 SBMs reporting data, with the majority of SBMs
(CO, CT, ID, MD, MA, MN, VT, WA) \2\ reporting increased enrollment of
this population when compared to this time last year. For example,
Colorado reported an increase in enrollment of 11 percent and two
States, Idaho and Maryland, reported a significant increase in
enrollment of 63 and 55 percent, respectively.
---------------------------------------------------------------------------
\2\ 2020 data not available for NJ and PA during which they
operated on the federally facilitated marketplace. Data from NV
unavailable at the time of reporting.
Enrollment increases may be a result of lower out-of-pocket premium
costs resulting from ARPA's premium tax credit enhancements. Eleven
SBMs report lower average premiums paid by 55+ year-olds after the
enactment of APRA. Average premiums for 55+ year-olds fell by over 20
percent in eight States (CT, DC, MD, NV, NJ, PA, RI, WA), with six of
those States reporting decreases in premiums of over $100 per month (or
$1,200 per year) (CT, DC, NV, NJ, PA, WA).\3\
---------------------------------------------------------------------------
\3\ Analysis is based on premium data reported as of April 1, 2021.
Data not available for MA and NY which do not allow for age-based
rating of premiums.
Increased affordability may also be driving this population to seek
higher value coverage in the form of silver and gold level plans
available through the marketplaces. Growth was especially notable in
gold-level enrollments, as SBMs saw a 17% increase compared with last
year.\4\ Overall 63% of 55+ enrollees elected either a silver or gold
plan across the 13 SBMs.
---------------------------------------------------------------------------
\4\ 2020 data not available for NJ and PA during which they
operated on the federally facilitated marketplace. Data from NV
unavailableat the time of reporting.
ARPA Yields Significant Savings for Some Pre-Retirees
Subsidy enhancements have enabled single digit coverage for the first
time for older adults. For example, a 60-year-old in Connecticut making
$19,000 a year can now access a silver-level plan through the SBM for
as low as $3/month or $36 per year (a 95 percent savings from pre-ARPA
rates).
Affordability and Enrollment Gains for Moderate-Income Enrollees in
SBM Plans
ARPA imposed a first-time ever cap \5\ on monthly premium expenses
households must pay toward marketplace coverage, regardless of income.
This meant that, for the first time, households earning at or above
400% FPL ($104,800 for a family of four in 2021), could qualify for
premium tax credits available through the marketplaces. The
availability of tax credits has led to significant savings, with eight
States (CO, DC, ID, MA, MD, NV, NY VT) reporting that average out-of-
pocket premiums has fallen by greater than $100 per month (or $12,000
per year) since ARPA's enactment. The District of Columbia and Idaho
report that average premiums have fallen over $300 per month (or $3,600
per year), while Colorado reports savings of $497 per month (or $5,964
per year).\6\
---------------------------------------------------------------------------
\5\ Under ARPA, the cap is set at 8.5% of household income.
\6\ Based on households electing to receive financial assistance in
the form of advanced premium tax credits. Data not available for CT,
MN, NJ.
The increased affordability of SBM plans for those with income at or
above 400% FPL may have triggered more of these moderate income
households to enroll in coverage through SBMs. Since the enactment of
ARPA, the U.S. Department of Health and Human Services reports that an
estimated 88,600 individuals from households with income above 400% FPL
have enrolled in coverage through the SBMs.\7\
---------------------------------------------------------------------------
\7\ U.S. Department of Health and Human Services, ``2021 Final
Marketplace Special Enrollment Period Report.'' Report, September 15,
2021. Accessed at: https://www.hhs.gov/sites/default/files/2021-sep-
final-enrollment-report.pdf.
Looking ahead, SBMs are preparing for the next open enrollment season,
launching on November 1, and working to ensure that customers, new and
old, continue to leverage their resources to access the best value
coverage. NASHP will continue to monitor emerging SBM trends. See
addendum and infographic below for some additional details.
Customer Testimonials on ARPA and Marketplace Coverage
Since enactment of ARPA, customers of the Washington Health Benefit
Exchange report greater ability to afford and use coverage through the
marketplace. As shared by one 57-year old customer: ``My bill [is] $242
less than I presently pay. . . . If this continues, I could afford to
get better insurance or pay out of pocket for occupational therapy that
my insurance and the third party employer tell me I can't have.''
Another consumer reported that the additional subsidies enabled them to
move from bronze to silver-level coverage which, in-turn, enabled them
to afford prescription medicines the individual had previously been
unable to purchase.
Addendum
Additional Customer Testimonials as Reported by State-based
Marketplaces
Massachusetts Health Connector
Responses reported from a customer survey of enrollees over 55 years of
age:
``The American Rescue Plan helped me tremendously. I was struggling
paying high rent, high insurance of $ 498.00 a month plus dental
insurance, bills, food, and personal protective equipment. I know I
would not be able to pay insurance without the help of The American
Rescue Plan I can use the extra money for transportation back and forth
to work.'' --Sheila (Boston, MA)
``My husband passed away in May 2020 from the coronavirus. We owned our
own construction business and since we were self-employed, we had no
help with health insurance. I had to sell my home and close our
business, and I didn't know what I was going to do for health insurance
as I was out of a job. Thank goodness the American Rescue Plan helped
me continue to have health insurance coverage.'' --Debra (Peabody, MA)
``I have been a diabetic for 58 years and having no premium and very
low cost on prescription has been huge. I have never made a lot of
money and shelling out what I used to held me back from doing a lot of
things. Diabetes is a rich man's disease. Prices on everything are
going up and what I save in medical costs leaves me with more money for
living.'' --Lisa (Brockton, MA)
Pennie/Pennsylvania
``I had an incident a year ago. I retired from the Harrisburg school
district. I tore my Achilles heel and was in a cast for longer than 6
weeks. I needed to transfer to a `boot'--[but could not get] one
without insurance. I [paid] $2,000 per month for health insurance. This
was too much, but we made it work. This year, Pennie has made things
very, very affordable. I was diagnosed with Lupus and Prostatitis if I
did not have this insurance there is no way in the world that I would
be protected. I am getting the proper help now I pay $40 for therapy or
$15 for an office visit--before it was $100 per visit. I used to have
to cancel my appointments so that my wife could go to her appointment.
This year, my wife has Crohn's disease--under Pennie, she's protected!
My wife and I now have the help that we need.'' --Keith, Age >55
Since enactment of ARPA, Keith and his wife now pay only $99.84 a month
for coverage, a savings of $22,802 per year.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__
Prepared Statement of Linda J. Blumberg, Ph.D.,*
Institute Fellow, Urban Institute
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* The views expressed are my own and should not be attributed to
the Urban Institute, its trustees, or its funders.
---------------------------------------------------------------------------
Chairman Wyden, Ranking Member Crapo, and distinguished members of
the committee, thank you for inviting me to address current issues
related to health insurance in the U.S. While I am an employee of the
Urban Institute, the views expressed in this testimony are my own and
should not be attributed to the Urban Institute, its trustees, or its
funders.
Research has demonstrated that the Affordable Care Act has
increased health insurance coverage in the U.S. among the nonelderly by
more than 20 million people.\1\ The enhancements of premium tax credits
provided by the American Rescue Plan Act (ARPA) have increased coverage
further, albeit temporarily, given the limited duration of the enhanced
credit period. These reforms also have improved affordability of
insurance coverage and increased access to care for millions of
Americans.
---------------------------------------------------------------------------
\1\ Linda J. Blumberg, Michael Simpson, Matthew Buettgens, Jessica
Banthin, and John Holahan, ``The Potential Effects of a Supreme Court
Decision to Overturn the Affordable Care Act: Updated Estimates''
(Washington, DC: Urban Institute, 2020).
As a result, the U.S. health insurance system provided a stronger
safety net during the pandemic-induced economic downturn than in prior
recessions. According to the Urban Institute's Health Reform Monitoring
Survey, the number of nonelderly adults with employer-based insurance
fell by approximately 5.5 million between March 2019 and April 2021.\2\
Yet unlike prior recessions, the number with Medicaid increased even
more. As a consequence, the number of uninsured held steady instead of
increasing nationwide. However, while nationwide data is encouraging,
the number of uninsured rose in nonexpansion States because smaller
shares of people who lost employer coverage were eligible for Medicaid.
---------------------------------------------------------------------------
\2\ Michael Karpman and Stephen Zuckerman, ``The Uninsurance Rate
Held Steady during the Pandemic as Public Coverage Increased: Trends in
Health Insurance Coverage between March 2019 and April 2021''
(Washington, DC: Urban Institute, 2021).
Still, nationwide, the private nongroup insurance Marketplaces are,
by all indications, fundamentally stable. In 2021, the national average
benchmark premium fell for the third year in a row, with average
decreases in 43 States and only 1 State with an increase of more than 6
percent, following very large premium increases in 2018.\3\ In
addition, insurer participation in the Marketplaces has increased since
2017 in many population centers. However, in areas with lower insurer
participation and/or consolidation among health providers, premiums and
premium growth tend to be higher.
---------------------------------------------------------------------------
\3\ John Holahan, Jessica Banthin, and Erik Wengle, ``Marketplace
Premiums and Participation in 2021'' (Washington, DC: Urban Institute,
2021).
Even recognizing the successes, significant gaps remain in the
health insurance system. First, more than 3 million people living below
the poverty line and 1.2 million near-poor people are uninsured and
ineligible for any financial assistance because they live in States
that have not expanded Medicaid eligibility.\4\ In addition, absent the
temporarily increased ARPA Marketplace subsidies, my Urban Institute
colleagues estimate that the number of uninsured nationally would reach
30 million in 2022.\5\ Conversely, they estimate that making the ARPA
subsidies permanent and extending them to lower-income people in
nonexpansion States would decrease the uninsured by another 7 million
people at a net Federal cost of $27.7 billion in 2022, or $333 billion
over 10 years. In addition, these estimates indicate that such policies
would increase Marketplace enrollment while decreasing Marketplace
premiums by 18 percent, on average, because of the relatively better
average health of the new enrollees.\6\ Taking lower premiums and out-
of-pocket costs into account, the average per enrollee health-care
costs for those insured through the Marketplaces would be over $1,100
lower per year.\7\
---------------------------------------------------------------------------
\4\ Michael Simpson, Jessica Banthin, and Matthew Buettgens, ``Most
Uninsured People Gaining Medicaid Eligibility under Potential Expansion
Would Have Incomes below the Federal Poverty Level'' (Washington, DC:
Urban Institute, 2021).
\5\ Jessica Banthin, Michael Simpson, and Andrew Green, ``The
Coverage and Cost Effects of Key Health Insurance Reforms Being
Considered by Congress'' (New York: Commonwealth Fund, 2021).
\6\ Jessica Banthin, Matthew Buettgens, Michael Simpson, and Robin
Wang, ``What If the American Rescue Plan's Enhanced Marketplace
Subsidies Were Made Permanent? Estimates for 2022'' (Washington, DC:
Urban Institute, 2021).
\7\ Banthin, Buettgens, Simpson, and Wang, ``What If the American
Rescue Plan's Marketplace Subsidies Were Made Permanent?''
While such opportunities exist to expand coverage, further action
also must be considered, because the pending end of the national public
health emergency (PHE) will also end the requirement that States keep
people enrolled in Medicaid, and this transition poses future
challenges for coverage. Urban Institute estimates indicate that
Medicaid enrollment could decrease by as many as 15 million people
during 2022 once the PHE-related maintenance-of-effort requirement
ends, including 8.7 million adults and 5.9 million children. These
numbers are partly offset by the projection that one-third of those
adults would qualify for subsidized private health coverage in the
Marketplaces. About two-thirds of the children would be eligible for
assistance, much of it through CHIP. However, others have highlighted
that the number losing Medicaid coverage at the end of the PHE could
exceed 15 million people, given the difficulty of contacting still-
eligible people to reverify and renew enrollment when they have not
been in contact with State Medicaid systems for up to 2 years.\8\
---------------------------------------------------------------------------
\8\ Kinda Serafi, Cindy Mann, and Nina V. Punukollu, ``The Risk of
Coverage Loss for Medicaid Beneficiaries as the COVID-19 Public Health
Emergency Ends,'' To the Point (blog), Commonwealth Fund, September 23,
2021, https://www.commonwealthfund.org/blog/2021/risk-coverage-loss-
medicaid-beneficiaries-covid-19.
Thus, the risk of a significant increase in the number of people
uninsured following the end of the PHE is substantial, and such risk
merits legislative and administrative consideration. As I have
outlined, permanent, enhanced premium tax credits should encourage more
people to move from Medicaid to the Marketplace once they lose Medicaid
eligibility. Further, aggressive outreach and enrollment efforts at the
State and Federal levels, in addition to streamlining Medicaid
redetermination and enrollment processes, are among viable options
available to address the potential for a near-term increase in the
---------------------------------------------------------------------------
number of uninsured Americans.
Thank you for the opportunity to share information with you on
these important issues. I'd be happy to answer any of your questions.
______
The Coverage and Cost Effects of Key Health Insurance Reforms Being
Considered by Congress
_______________________________________________________________________
by Jessica S. Banthin, Michael Simpson, and Andrew Green
Errata
On October 5, 2021, we corrected errors in this brief resulting from a
coding error that did not apply all cost-sharing reductions to
household spending. In the ``Changes in Household Spending'' section
and Appendix Table 3, the increase in households' out-of-pocket
spending is $0.6 billion and households' overall savings is $8.2
billion in 2022. Previously, these estimates were $7.0 billion and $1.8
billion.
Highlights
Making ARPA premium subsidies permanent and filling the Medicaid
coverage gap would reduce the number of people without insurance by
nearly one-
quarter, or 7.0 million people, in 2022.
All States would see a drop in their uninsured population, with
the largest percentage declines in States that have not yet expanded
Medicaid eligibility.
Enrollment in subsidized marketplace plans would nearly double,
while premiums would fall by 18 percent on average.
Federal spending would increase by an estimated $442 billion
over 10 years and, after accounting for increased revenues because of
higher wages and some offsetting savings, this reform would increase
the Federal deficit by an estimated $333 billion if no other changes in
policy were made.
Introduction
As part of the budget process for fiscal year 2022, Congress is
considering a package of two reforms to the Affordable Care Act (ACA).
Under the package, the enhanced premium subsidies included in the
American Rescue Plan Act (ARPA) would become permanent. Additionally,
the so-called Medicaid coverage gap would be filled by extending
eligibility for marketplace subsidies to people earning below 100
percent of the Federal poverty level (FPL) in 12 States that have not
yet expanded Medicaid.
Following is a closer look at the two reforms.
Making the ARPA Premium Subsidies Permanent
Passed in the wake of economic disruption and job losses because of the
COVID-19 pandemic, the ARPA temporarily enhances premium tax credits in
the marketplace for 2021 and 2022. The law lowers the limits on
premiums paid by families who were eligible for subsidies before ARPA
and expands eligibility for subsidies to individuals and families who
were previously ineligible because their incomes were greater than 400
percent of FPL (more than $106,000 for a family of four).
The new subsidy schedule substantially reduces households' premium
payments (see Appendix Table 1). Making these changes permanent would
have significant effects on coverage, as we've previously estimated.\1\
---------------------------------------------------------------------------
\1\ Jessica Banthin et al., What If the American Rescue Plan's
Enhanced Marketplace Subsidies Were Made Permanent? Estimates for 2022
(Urban Institute, Apr. 2021).
---------------------------------------------------------------------------
Extending Eligibility for Marketplace Subsidies in Nonexpansion States
Under current law, people with incomes below 100 percent of FPL are not
eligible for marketplace subsidies. Because of the large gap between
traditional Medicaid eligibility levels in some States and 100 percent
of FPL, about 5.8 million uninsured adults living in the 12
nonexpansion States do not have access to affordable health insurance
coverage. (For example, Texas covers parents below 17 percent of FPL
while Alabama covers those below 21 percent of FPL; childless adults
are generally not covered in nonexpansion States.)
Although health insurance coverage through the marketplace is not as
comprehensive as Medicaid coverage, expanding eligibility for
marketplace subsidies to this group results in large increases in
coverage.\2\
---------------------------------------------------------------------------
\2\ John Holahan et al., Filling the Gap in States That Have Not
Expanded Medicaid Eligibility (Commonwealth Fund, June 2021).
For this analysis, we examined the coverage and cost impact of these
two key reforms together, using the Urban Institute's Health Insurance
Policy Simulation Model (see ``How We Conducted This Study.'') Our
analysis incorporates the effect on enrollment of increased Federal
spending on outreach.
Findings
Changes in Coverage
Implementing these two policies would increase insurance coverage,
reducing the number of uninsured people by nearly one-quarter. The
number of uninsured people would fall by 7.0 million, from 30.3 million
to 23.3 million (Exhibit 1).
EXHIBIT 1
Coverage of the Nonelderly Population Under Pre-ARPA Law and Permanent
ARPA Subsidies with Medicaid Gap Filled by the Marketplace, 2022
Thousands of people Pre-ARPA Reform Change Change (%)
Employer 149,214 148,543 -670 -0.4%
Subsidized nongroup 9,219 17,252 8,033 87.1%
Unsubsidized 5,636 5,301 -335 -5.9%
nongroup
Medicaid/CHIP 71,896 72,242 346 0.5%
Other coverage * 11,213 10,832 -381 -3.4%
Uninsured 30,269 23,276 -6,993 -23.1%
Total 277,446 277,446 0 0.0%
Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
gap by expanding subsidies for marketplace plans below 100 percent of
the Federal poverty level. ARPA = American Rescue Plan Act. CHIP =
Children's Health Insurance Program.
* Other coverage includes Medicare and other public coverage and a small
amount of Affordable Care Act noncompliant nongroup coverage.
Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
2021.
Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
and Cost Effects of Key Health Insurance Reforms Being Considered by
Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
/doi.org/10.26099/4gyx-ry85.
The enhanced subsidies would motivate many people who were previously
eligible for marketplace subsidies but uninsured to sign up for
coverage. Enrollment in the subsidized nongroup marketplace would jump
by 8.0 million people, nearly doubling in size to 17.3 million people
across the health-care.
We also estimate 670,000 fewer people would be covered by employer-
sponsored insurance (ESI). Most of the people who would leave ESI are
those whose employers still sponsor health insurance but whose
offerings are not deemed affordable; only a very small number would
likely leave ESI because their companies would stop offering health
coverage. This number does not include the reduction in ESI because of
an administrative change in the so-called family glitch, which is
discussed later in this brief.
We project that Medicaid and Children's Health Insurance Program (CHIP)
enrollment would increase slightly by 346,000 people. Higher enrollment
in the marketplace would likely trigger eligibility determinations that
prompt family members to enroll in Medicaid. (Additional details on
coverage changes are available in Appendix Table 2.)
Changes in Marketplace Premiums
An important result of the large increase in marketplace enrollment is
the effect on premiums. We estimate that lower health risk scores among
new enrollees would reduce premiums by about 18 percent in 2022 if
insurers were able to adjust premiums immediately. The main reason
average health risk would fall under these policies is that those with
greater health-care needs are more likely to have already obtained
coverage before passage of the ARPA.
Changes in Coverage by Income
Exhibit 2 shows that reductions in uninsured people would be
concentrated in the lowest income categories. About 3.3 million
uninsured people with income below 138 percent of FPL would gain
coverage, largely because more residents of the 12 nonexpansion States
would be eligible for marketplace subsidies. Nearly 600,000 uninsured
people with income between 138 percent and 200 percent of FPL would
gain coverage, while 2.2 million uninsured people with income between
200 percent and 400 percent of FPL would become covered as well, mainly
because of more generous premium subsidies. Among those with income
above 400 percent of FPL, 830,000 uninsured people would obtain
coverage because of lower premiums and expanded eligibility for premium
subsidies under the ARPA.
Changes in Coverage by Race and Ethnicity
As a result of the new policy, all racial and ethnic groups would
experience large declines in the numbers of nonelderly people without
insurance (Exhibit 3). According to our estimates, Black non-Latino/
Hispanic and white non-Latino/Hispanic groups would see the largest
percentage reductions--33.5 percent and 26.9 percent, respectively.
People of Latino/Hispanic ethnicity have the highest rate of uninsured
people (20.9 percent, data not shown) compared to other groups, owing
to the undocumented immigrant population. Under this policy, they would
see the smallest percentage reductions in uninsured people, 15.7
percent, compared to other groups.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
EXHIBIT 3
Number of Uninsured Nonelderly People, Pby Race and Ethnicity, 2022
Thousands of people Pre-ARPA Reform Change Change (%)
American Indian and 596 455 -141 -23.6%
Alaska Native
Asian and Pacific 1,640 1,366 -274 -16.7%
Islander
Black, non-Latino/ 3,638 2,421 -1,217 -33.5%
Hispanic
Latino/Hispanic 10,539 8,883 -1,656 -15.7%
White, non-Latino/ 13,458 9,836 -3,622 -26.9%
Hispanic
Other 398 316 -83 -20.7%
All racial and 30,269 23,276 -6,993 -23.1%
ethnic groups
Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
gap by expanding subsidies for marketplace plans below 100 percent of
the Federal poverty level. ARPA = American Rescue Plan Act.
Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
2021.
Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
and Cost Effects of Key Health Insurance Reforms Being Considered by
Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
/doi.org/10.26099/4gyx-ry85.
Changes in Spending and Effects on Deficits
By making the ARPA premium subsidies permanent and extending
eligibility for marketplace subsidies, we estimate Federal spending on
marketplace subsidies and Medicaid and CHIP would increase by $36.9
billion in 2022 (see Appendix Table 3). This increased spending would
be offset partly by savings from reductions in the demand for
uncompensated care. Although we include all of the estimated $7.5
billion reduction in uncompensated care in our calculation, only about
half would be realized as savings directly through a reduction in
Medicare Disproportionate Share Hospital (DSH) payments. The net effect
on the deficit would amount to $27.7 billion in 2022 after accounting
for higher Federal revenues because of reductions in ESI coverage,
which is generally exempt from income and payroll taxes.
The increased cost of marketplace subsidies and Medicaid from 2022 to
2031 would add up to $442 billion (Exhibit 4). After accounting for
increased revenues because of reductions in ESI and reductions in
uncompensated care, we estimate that the net effect on the Federal
deficit would be $333 billion over 10 years, from 2022 to 2031. The
costs would likely be somewhat lower than presented here because
consumers and insurers may take more time than we assumed to fully
respond to the new options.
EXHIBIT 4
Federal Spending for the Nonelderly Population Under Pre-ARPA Law and
Permanent ARPA Subsidies with Medicaid Gap Filled by the Marketplace,
2022-2031
Billions of dollars Pre-ARPA Reform Change
Federal spending on acute health 5,655 6,007 353
care
Medicaid 4,578 4,603 25
Marketplace tax credits 689 1,106 418
Marketplace cost-sharing 0 0 0
reductions
Reinsurance 16 16 0
Uncompensated care * 372 282 -90
Increase in Federal revenue ** n/a n/a 20
Total net change in deficit n/a n/a 333
Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
gap by expanding subsidies for marketplace plans below 100 percent of
the Federal poverty level. ARPA = American Rescue Plan Act. CHIP =
Children's Health Insurance Program. n/a = not applicable; HIPSM
computes only changes for revenues and deficits.
* Uncompensated care represents demand for care by the uninsured. At the
Federal level, about half the change in demand resulting from a
decrease in the number of uninsured people would automatically be
realized as Federal savings to Medicare disproportionate share
hospitals.
** Change in Federal revenue include the income and payroll tax effects
of employer-sponsored insurance crowd-out.
Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
2021.
Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
and Cost Effects of Key Health Insurance Reforms Being Considered by
Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021). https:/
/doi.org/10.26099/4gyx-ry85.
Changes in Household Spending
We estimate that household spending on premiums would fall $8.8 billion
in 2022 even as enrollment increases. However, household spending on
out-of-pocket costs for health-care services (including deductibles and
copayments) would increase by an estimated $0.6 billion in 2022 as
access to and utilization of health-care increases. Overall, households
would save $8.2 billion, according to our estimates. In previous work,
we found the ARPA by itself would reduce average household spending per
enrollee by 23.1 percent.\3\
---------------------------------------------------------------------------
\3\ Banthin et al., What If the American Rescue Plan's Enhanced
Marketplace Subidies Were Made Permanent?, 2021.
---------------------------------------------------------------------------
Changes in Coverage by State
If passed, this proposal would reduce the number of uninsured people in
every state. We find that the largest percentage declines would occur
in States that have not yet expanded Medicaid (Appendix Table 4).
Declines in the proportion of uninsured people range from nearly 44
percent in Alabama to less than 6 percent in Utah.
Impact of Additional Reforms Through Administrative Action
Our estimates incorporate the effect on enrollment of administrative
changes designed to increase participation, including a longer open
enrollment period starting with the 2022 plan year and additional
Federal spending on navigators, advertising, and other types of
outreach activity.
Under current law, families are generally ineligible for marketplace
subsidies if a family member is offered ``affordable,'' worker-only
coverage through an employer. The cost of covering the entire family is
not considered and may be unaffordable, resulting in the so-called
``family glitch.'' If this policy were changed through administrative
action to allow family members to become eligible for marketplace
subsidies, we estimate that about 710,000 additional people would
enroll in the subsidized nongroup market, most switching out of ESI. In
addition, about 90,000 family members, mainly children, would newly
enroll in Medicaid or CHIP as their parents seek marketplace coverage.
There would be 190,000 fewer uninsured people as a result of this
change. Families switching from ESI would save about $400 per person in
premiums on average. These changes in coverage were estimated
separately in a previous report and are not included in the numbers
discussed here.\4\
---------------------------------------------------------------------------
\4\ Matthew Buettgens and Jessica Banthin, Changing the ``Family
Glitch'' Would Make Health Coverage More Affordable for Many Families
(Urban Institute, May 2021).
We are not able to specifically model the provision of continuous open
enrollment for people below 150 percent of FPL for this report. In our
assessment, however, this provision would increase enrollment into the
marketplaces by between 100,000 and 200,000 people.
Conclusion
We estimate that making the enhanced ARPA subsidies permanent and
filling the Medicaid coverage gap by expanding marketplace eligibility
to those earning below 100 percent of FPL would have significant
changes on coverage. Together, these two policies would broadly expand
eligibility for marketplace subsidies, reduce the number of uninsured
people especially at lower income levels, and lessen household
financial burdens for health care.
_______________________________________________________________________
HOW WE CONDUCTED THIS STUDY
Our estimates use the Urban Institute's Health Insurance Policy
Simulation Model's (HIPSM) baseline for 2022. HIPSM is a detailed
microsimulation model of the health-care system designed to estimate
the cost and coverage effects of proposed health-care policy options.
HIPSM is based on 2 years of the American Community Survey, which
provides a representative sample of families large enough for us to
produce estimates for individual States and smaller regions, such as
cities.\5\
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\5\ Matthew Buettgens and Jessica Banthin, The Health Insurance
Policy Simulation Model for 2020: Current-Law Baseline and Methodology
(Urban Institute, Dec. 2020).
For the pre-American Rescue Plan Act (ARPA) baseline of our analysis we
chose 2022, a year when economic conditions should be more stable,
following the COVID-19 pandemic and consequent recession in 2020. We
assume, consistent with Congressional Budget Office projections, that
the economy will have partly recovered from the pandemic recession by
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that time.
For this analysis, we also assume that Medicaid's enhanced Federal
Medical Assistance Percentage (FMAP) and the maintenance of effort
provisions in the Families First Coronavirus Response Act will have
expired before 2022. However, in a letter to governors sent in late
January 2021, the acting secretary of the U.S. Department of Health and
Human Services indicated the public health emergency declaration will
be extended through calendar year 2021.\6\ This means Medicaid's
Maintenance of Eligibility (MOE) requirements, which prohibit States
from disenrolling Medicaid enrollees unless they request it, are
expected to last through January 2022. After that, the increased
enrollment because of the MOE requirements will start to decline as
States resume normal eligibility determinations.
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\6\ Norris W. Cochran IV, Acting Secretary, U.S. Department of
Health and Human Services, letter to Governors regarding the public
health emergency, Jan. 22, 2021.
Although recent guidance allows States up to 12 months to unwind the
MOE provisions, it remains uncertain how fast this will happen. As a
result, Medicaid enrollment may be higher in early 2022 than indicated
in our estimates. Also, the enhanced FMAP is expected to be available
through March 2022. The Federal Government will pay a higher share of
---------------------------------------------------------------------------
Medicaid costs in the first quarter of 2022 than we indicate.
The baseline and estimates presented here differ from earlier national
HIPSM projections of coverage and costs in that we now treat Missouri
and Oklahoma as Medicaid expansion States. Both States passed ballot
measures in 2020 to expand Medicaid but had not actually begun coverage
when we published earlier projections.
The ARPA includes an additional financial incentive for States that
have not expanded Medicaid to do so; newly expanding States receive a
boost of 5 percentage points to their FMAP for 2 years. Because neither
Oklahoma nor Missouri had begun covering Medicaid expansion
beneficiaries as of March 2021 when the ARPA became law, they are
eligible for the incentive payment. We estimate that the incentive
would shift $808 million of state costs to the Federal Government in
2022. As limited duration incentive payments, these costs are not
included in our baseline or in the estimates presented in this paper.
Acknowledgments
We thank John Holahan for his careful review of this report.
CITATION
Jessica S. Banthin, Michael Simpson, and Andrew Green, The Coverage and
Cost Effects of Key Health Insurance Reforms Being Considered by
Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
/doi.org/10.26099/4gyx-ry85.
______
Urban Institute
Design of Public Option and
Capped Provider Price Reforms
Important Interactions Between Provider and Other Program Features
Linda J. Blumberg
September 2021
The 2020 presidential election brought discussions of introducing a
public option into U.S. health insurance markets back to the forefront
of health policy debates. A public option would consist of a
government-designed and administered (directly or via contract) health
insurance plan or set of insurance plans that would be introduced in
one or more health insurance markets. The federal government would
determine payments made to providers (e.g., doctors, hospitals,
pharmaceutical manufacturers) participating with a public option or
negotiate prices with providers to attract them to participate;
alternatively, state governments or a quasi-governmental or nonprofit
entity could govern a public option. Conversations about public option
plans have also prompted discussions about a related policy option,
capping payments made to providers by commercial insurers. This
strategy would require providers participating in particular insurance
markets to accept prices from commercial insurers at or below a
government-designated level. Thus, these capped prices would apply to
providers participating in any private insurance plan offering coverage
in the specified markets, whereas a public option would apply
government-designated rates in new government-administered insurance
plans alone.
These two health reform approaches are related in that both seek to
provide insurance options to consumers that would pay providers based
upon payments determined (in the case of the public option) or limited
(in the case of capped provider prices) by the federal government or
its chosen agent. As noted, the public option would do so via a new
insurance plan or set of insurance plans administered by the
government, and the capped prices would do so via private insurers
participating in the markets chosen. Depending on where these rates or
rate limits are set, either approach could reduce premiums relative to
current levels. Either policy could be used alone or in tandem with the
other.
Though people broadly support the idea of a public option and/or
lowering the costs of health care (Politico 2020),\1\ implementing such
policies requires numerous design decisions, can have significant
unintended consequences, and is politically challenging. Design
decisions profoundly affect such policies' abilities to meet their
stated objectives, disruptions to the U.S. health-care system, and
health-care providers' finances. Many of these design decisions
interact with one another, meaning they ought to be considered
together. This is especially true of how the chosen schedule of
provider prices interacts with other design choices. Here I delineate
the major design choices that must be made for public option and/or
capped provider price reforms and outline their trade-offs in
government costs, household costs, impacts on providers, and access to
care. I explicitly recognize that a public option and capped provider
prices paid by commercial insurers can be implemented independently or
simultaneously.
---------------------------------------------------------------------------
\1\ Gaby Galvin, ``About 7 in 10 Voters Favor a Public Health
Insurance Option. Medicare for All Remains Polarizing,'' Morning
Consult, March 24, 2021, https://morningconsult.com/2021/03/24/
medicare-for-all-public-option-polling/.
What follows is a summary and interpretation of an extended
discussion in 2020 with a small group of health policy experts that
included, in addition to me, Michael Chernew, Jack Ebeler, Matt
Fiedler, Richard Frank, Sherry Glied, Tim Gronniger, John Holahan, Mark
Miller, and Cori Uccello. No particular view presented below should be
attributed to any particular participant or organization with which
they are affiliated. The central conclusions of the discussion include
---------------------------------------------------------------------------
the following:
Advocates of public option and capped provider price reforms
do not always agree on the reforms' intended objectives. Some see a
public option primarily as a cost-containment mechanism, intended to
lower public and private health-care spending and thereby increase
insurance coverage and access to care. Others view a public option as
most importantly an alternative to commercial insurance that could
better serve the interests of consumers; these supporters may have
little interest in designing a system to reduce the costs of care.
Capped provider prices could reduce health-care spending, increase
coverage, and improve access to care as well but would not provide an
alternative to commercial insurance.
Both reforms could reduce health-care spending, but the extent
of savings depends on the prices the reforms rely on and the markets in
which the reforms are introduced.
In designing either reform, the interaction of the provider
price schedule and the size of the markets included will have powerful
implications for the magnitude of system-wide savings and effects on
provider revenue. The lower the price schedule and the larger the
markets to which they apply, the greater the potential for public and
private savings. But greater, too, is the potential to disrupt health-
care provider markets.
In either reform, the provider price schedule will directly
affect providers' voluntary participation in the insurance plan
networks. Lower price schedules will tend to decrease voluntary
provider participation and thus make it more difficult to establish
broad provider networks. However, prohibiting providers refusing to
participate with the public option or commercial insurers relying on
capped prices from participating with other insurers in the same market
could increase participation.
A public option reform requires many additional design
decisions beyond those required of a capped provider price reform.
These include whether state variation in essential health benefit
requirements would be permitted, the actuarial value tiers in which a
public option would be introduced, risk adjustment participation,
applicability of premium taxes, reserve fund requirements, and
financing of start-up and administrative costs.
Setting capped provider prices at a relatively high point in
the provider price distribution (e.g., the 75th or 80th percentile)
would reduce the prices of the highest-priced insurance plans, and such
a reform could be introduced into both employer group and nongroup
markets with little anticipated health care delivery disruption.
Introducing a public option in nongroup insurance markets would provide
new competition in markets dominated by monopolistic providers and/or
insurers and would constitute a new tool that could evolve into a
valuable option for consumers dissatisfied with private insurance
options.
Objectives: Cost Containment versus Availability of Noncommercial
Broad Network Plans
Central to the effective design of any public policy is clarity in the
policy's intended objectives. Advocates of a public option are not
unanimous in their objectives, and design choices will determine which
objectives are most likely to be met by the program ultimately
introduced.
Some see a public option as a cost-containment mechanism. In many
areas of the country, lack of competition among insurers and/or health-
care providers is associated with high premiums, generally because of
high provider prices.\2\ Regardless of the source of high medical
prices, many support lowering them to improve access to care and free
up public and private funds for other priorities. A public option run
by the federal government could make payments to health-care providers
that are lower than those paid by most commercial insurers. Doing so
would mean public option plans could offer consumers actuarially fair
premiums lower than many of those offered by commercial insurers. Lower
premiums translate into household savings on out-of-pocket costs for
people enrolled in the option, and lower premiums may put competitive
pressure on private insurers in markets where the public option is
introduced (Blumberg et al. 2019). A public option introduced in the
employer market could provide a lower-premium insurance option for
employers and their workers. Likewise, a public option offered in the
private nongroup insurance market could offer a lower-premium option to
nongroup enrollees, especially those with higher incomes that make them
ineligible for federal financial assistance (Blumberg 2021). In
addition, if a public option were to decrease the nongroup Marketplace
benchmark premium (currently set at the second-lowest silver
Marketplace premium in a person's area of residence), federal spending
on premium tax credits would decrease as well, leading to government
savings. Likewise, placing caps on provider prices for commercial
insurers in all or some markets could generate both private and
government savings.\3\ Depending on how it is administered, a public
option could also operate with lower administrative costs than those
typical of private insurers, another possible source of savings that
could lower premiums.
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\2\ Though monopolistic (or otherwise strongly consolidated)
insurers should have substantial leverage to reduce provider prices and
thus reduce premiums, many areas with highly concentrated insurance
markets also have highly concentrated provider markets. Even when that
is not the case, dominant insurers do not face strong incentives to be
tough negotiators with providers, and thus they seldom use that
leverage to significantly reduce prices. For example, highly
concentrated insurance markets are strongly correlated with high
premiums in the nongroup market (Holahan, Banthin, and Wengle 2021).
\3\ The greatest savings resulting from lower nongroup Marketplace
premiums accrue to people with incomes sufficiently high that they pay
for full premiums independently, without federal premium subsidies.
However, lower premiums can also generate savings for people eligible
for premium subsidies who choose insurance options that are more
expensive than the second-
lowest silver (benchmark) premium available, since these consumers are
liable for the full difference between premiums for the benchmark and
the more expensive plan. In addition to government savings resulting
from lower nongroup Marketplace benchmark premiums, lower commercial
insurance premiums in the employer market can also generate government
savings. Economic theory and empirical research suggest lower employer
spending on health insurance premiums tends to translate into higher
wages. Because wages are taxable as income but health insurance
contributions are not, lower premiums in the employer market tend to
increase government tax revenue.
Lower health-care spending during the first year of the COVID-19
pandemic reduced the sense of urgency some felt in addressing rising
health-care spending via a public option or provider price caps.
However, the drivers of increased health-care spending in private
markets that many were concerned about before the pandemic have not
changed, meaning those concerns will return. Moreover, an ongoing focus
has been placed on the extent to which Medicare and private insurers
overspend on prescription drugs, and concerns remain about how Medicare
Advantage plan pricing potentially increases health-care costs. In
addition, the Biden administration has already issued an executive
order instructing federal agencies to work on addressing broad issues
related to the economic consequences of market consolidation, including
in the health-care sector. This signals that health-care cost
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containment strategies remain an important policy interest.
Others see a public option as an alternative insurance vehicle that
would be more responsive to the interests of consumers than profit-
motivated insurers. Some people are concerned with the narrow provider
networks offered in many nongroup insurance market plans in particular,
and they see a public option as a way to offer consumers broad provider
networks at an affordable premium, not unlike the traditional Medicare
program. Some people value a single insurance plan being available to
everyone across the country, particularly one theoretically less likely
to deny claims or limit important benefits. Some view a public option
as a vehicle for providing subsidized coverage to populations currently
without coverage options (e.g., those in the Medicaid eligibility
gap),\4\ whereas others see it as a first step toward a Medicare for
All program.
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\4\ Currently, 12 States continue to refuse to expand Medicaid
eligibility to all lawfully present residents with incomes up to 138
percent of the federal poverty level (FPL). Because the Affordable Care
Act was written assuming Medicaid expansion would be implemented in all
States, its drafters only made people with incomes above the FPL
eligible for premium tax credits through the Marketplaces.
Consequently, many people with incomes below the FPL are ineligible for
any financial assistance obtaining health insurance in 11 of those
States, because those States' traditional Medicaid eligibility rules
exclude nonparents and are generally very limited for parents. For
example, in Alabama, only parents with incomes up to 18 percent of FPL
are eligible for Medicaid and nonparents are ineligible regardless of
income. In Texas, parents with incomes up to 17 percent of FPL are
eligible and all nonparents are ineligible. The one notable exception
is Wisconsin, which has not expanded Medicaid eligibility under the
Affordable Care Act but extended its traditional Medicaid program to
all adults with incomes up to the FPL. In addition to people with
incomes below the FPL in these States, others with incomes between 100
and 138 percent of FPL are excluded from Marketplace assistance if
someone in their family is eligible for worker-only employer-based
insurance deemed affordable to them.
Capping provider prices for all commercial insurers could create
public and private health-care savings, as noted above, regardless of
whether capped prices are implemented alongside a public option. In
fact, because most insurer premiums could be affected by the caps,
depending on where they are set, the caps could lead to greater
aggregate private savings than a public option alone. However, capping
prices paid by commercial insurers cannot satisfy the desire for an
alternative to insurers motivated by profit or other interests that
benefit certain private entities (e.g., private nonprofit insurers), as
the public option could do. Consequently, the primary purpose of capped
provider prices is to reduce health-care spending by reducing
providers' and/or insurers' market power over prices while maintaining
sufficient quality of and access to care. In addition, such an approach
can improve equity in the markets by reducing the variation in prices
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paid across providers and markets.
These different objectives will often be in some tension with one
another. Creating and maintaining broad provider networks, for example,
generally requires paying providers higher prices to attract their
participation. Higher provider prices, in turn, will generally
translate into higher premiums and reduce the opportunities for private
and public savings. Plans with lower rates of claims denials will also,
however, tend to increase provider participation even at lower prices
(Dunn et al. 2021), but they may lead to increased costs as well.\5\
Therefore, I refer to these somewhat competing objectives while
presenting the advantages and disadvantages of specific design choices.
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\5\ Lower claims denial rates will generally mean higher total
amounts of claims paid. Higher spending on claims payments translates
into higher premiums.
Private and public savings resulting from lowering payments to
providers under either a public option or capped provider prices can
increase health insurance coverage. Combined with current medical loss
ratio restrictions, lower payments to providers per service should
translate into lower premiums. In turn, lower premiums facing consumers
can increase the number of people purchasing coverage in the nongroup
market. For employers, lower premiums can translate into greater
enrollment by workers and some current premium spending being
transformed into higher taxable wages. Government savings from lower
premium tax credits in the nongroup market and/or greater tax revenue
from increased wages in the employer market make more dollars available
to enhance financial assistance in the nongroup market (e.g., improved
premium tax credits) or expand eligibility for public programs (e.g.,
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filling in the Medicaid coverage gap).
Though related, the public option and caps on private insurers'
provider prices will likely affect different insurance markets
differently. Capped provider prices constrain the range of prices of
participating insurers but otherwise leave the markets structured as
they are today. The public option introduces a new and potentially
lower-priced insurer into the market, but it does not explicitly
constrain commercial insurers' pricing. Depending on the
characteristics of particular insurance and provider markets, the
resulting competitive responses could differ.
The Foundation for Developing Provider Price Schedules
Both a public option and capped provider prices for private insurers
require delineating provider price schedules. With a public option, a
schedule would determine the reimbursements for medical services
provided to enrollees. With capped prices, a schedule would limit
commercial insurers' provider payments to no more than specified
levels. Schedules could be based on services for health care
professional payments and per admission diagnostic related groups for
hospital payments, for example, as is the case for the Medicare
program. Under either approach, payment schedules or limits on prices
should reflect the intensity of services provided. The main foundations
considered for creating such payment schedules are the traditional
Medicare schedule and commercial insurer fees. Both have distinct
advantages and disadvantages for public option and capped provider
price policies.
The Medicare Fee Schedule
This schedule is an existing set of prices that accounts for geographic
variation in the costs of providing care. Consequently, the Medicare
schedule could be applied to new programs or plans quickly. A small
number of services, particularly those for pediatric care, may need to
be added to the existing schedule, but it already accounts for the vast
majority of care. The Medicare fee schedule has also been developed
with the intent to reimburse providers at levels relative to each other
based on variations in input costs and the relative value of different
services provided. Thus, price differences across the schedule have a
rational basis. Depending on how high policymakers want prices to be,
multiples of Medicare prices could be used, for example, 110 or 160
percent of Medicare prices. Different multiples could be used for
hospital versus professional care. This would account for current
commercial rates for professionals already being closer to Medicare
rates than are hospital rates. And, institutionally, provider
participation issues for public insurance programs have been a greater
concern for physicians than for hospitals. More complexity could be
introduced by varying the percent adjustments more finely, for example,
by treating different types of hospitals differently (e.g., teaching
hospitals, rural hospitals) or treating various physician specialties
differently.
The Medicare fee schedule--based approach also has the advantage of
containing a ready-made measure of provider volume. One risk of
lowering provider prices is that some providers could respond to the
ensuing reduction in revenue by increasing the volume of services they
provide per patient on average. Medicare's relative value units and
diagnostic related groups can be aggregated for each provider, as
measures of each provider's volume. These can be used as a basis for
further price adjustments should the average volume of services
provided per patient increase significantly under reform.
The trade-off of using the Medicare payment schedule, however, is
that it could complicate the general Medicare rate setting process and
the process of establishing these rates (e.g., the recommendations of
the Relative Value Scale Update Committee). If a public option or
commercial provider price limits were to rely on the Medicare schedule,
then any discussion or debate over modifications to Medicare rates
(e.g., productivity adjustments, growth rates) would have implications
for provider prices more generally. Lobbying around the Medicare
schedule would become more complicated and fraught, and these pressures
could push Medicare rates higher than they otherwise would be, because
a larger share of provider revenues would be at stake, leading
providers to lobby harder to keep prices up. However, the savings to
government and consumers would be commensurately larger, potentially
leading policymakers to pursue them more aggressively; consequently,
the ultimate impact of a public option or capped provider prices on
Medicare payment rates is uncertain.
Provider Prices Used by Commercial Insurers
These prices vary dramatically across insurers, providers, and even
plans offered by the same insurers. A substantial part of the variation
in commercial insurers' provider prices likely relates to geographic
variation in provider and/or insurer competition. A schedule for a
public option or capped prices could be developed using a specified
percentile of the distribution of commercial provider prices, say the
median, depending on the payment schedule desired. The advantages of
relying on a payment schedule based in commercial rates are that the
schedule (1) may be more politically palatable to health-care providers
and (2) would not interfere with negotiations between providers and the
federal government over Medicare rates. However, that political appeal
may fall appreciably if provider prices are set well below the median
of current rates (e.g., at the 35th percentile).
If a schedule based on a low percentile of national commercial
rates were chosen, the impact of consolidation and noncompetitive
markets that have inflated prices in some areas would be less likely to
affect the delineated schedule. For example, if the 20th percentile of
the commercial rate distribution for each service were chosen as a
benchmark, those rates could be multiplied by a factor greater than 1
to increase payment levels without having the relative prices for
different services affected by existing monopolistic behavior.
Geographic cost adjustments could be applied after the fact. In
addition, the commercial rate approach does not require providers or
insurers to change the definition of services they use to be consistent
with Medicare definitions; however, commercial insurers' definitions of
services likely vary, so some disruptions and system modifications
would be required to standardize these definitions regardless.
The first disadvantage of the commercial benchmark is that
determining the distribution for every existing medical service would
be a significant data-collection undertaking. This information does not
currently exist, so collecting it will take considerable time and
resources. In addition, market forces, not relative value, determine
commercial providers' prices, an important difference from the Medicare
schedule, which explicitly accounts for relative value. Consequently,
the current variation in commercial prices across the country is
tremendous. Any particular point in the pricing distribution may not
appear to make sense based on rational criteria, because the pricing
distribution is the product of market distortions. Plus, many
commercial insurers pay hospitals based on days instead of admissions,
which tends to increase spending by private payers. Further, coding
across private insurers is seldom comparable, which creates
considerable complexity in comparing current prices across these
insurers.
Regardless of which benchmark is used, the final payment schedule
and annual update approach chosen will determine a reform's effect on
the provider market (i.e., savings and access to care). Theoretically,
using an upwardly adjusted Medicare schedule as a benchmark (e.g., 120
percent of Medicare rates) could achieve similar savings as using the
distribution of commercial prices as a benchmark, depending on which
percentile is chosen and whether any additional adjustments are
applied. The same is true regarding the annual adjustment chosen. The
closer rates remain to current ones, the lower the risk of disruption
to the health-care system, but the lower, too, are savings from the
reform.
Managing a public option or capped prices, including the level and
growth of prices, could be entrusted to an active administrator or
possibly to a state department of insurance if national variation were
permitted. In this way, the administrator could adjust prices
(including for geographic variation) as a function of information
collected on access to different types of care, provider participation,
the quality of care provided, and aggregate spending. Such discretion
would create some additional uncertainty about ultimate public and
private savings, but the flexibility would provide the administrator
with the nimbleness necessary to modify prices and correct for
unintended consequences of over or underpricing particular services.
Limits on the flexibility provided to such an administrator would
likely be needed, however. Otherwise, providers with market strength
could effectively negotiate prices with the public option and drive
prices higher than appropriate or desirable. In addition, the
capabilities of different departments of insurance vary considerably
across States. Thus, if they were to administer a public option or
capped prices, they could define important economic parameters
differently, which could lead to some positive and some negative
outcomes.
Interaction of the Provider Price Schedule and the Size of Markets
Included in a Reform
As analysts have shown (Holahan and Simpson 2021), introducing a public
option or capped provider prices into nongroup insurance markets alone
is unlikely to generate large aggregate savings. This is purely because
the number of people buying coverage in those markets is small, an
estimated 15 million people in 2022 (Banthin et al. 2020). The employer
group market is roughly 10 times as large, an estimated 150 million
people in 2022. Consequently, implementing these types of reforms in
the employer group market creates more potential for private and public
savings and disruption of the health care delivery system. Commercial
insurers' payments to providers in many nongroup insurance markets are
also likely already significantly lower than those paid in employer-
sponsored insurance markets, an additional reason why these types of
reforms have greater savings potential in the employer market than the
nongroup market (Blumberg et al. 2020). For example, according to Urban
Institute estimates, introducing a public option paying providers rates
modestly above Medicare's (Medicare plus 10 percent for professionals
and Medicare plus 25 percent for hospitals) in nongroup insurance
markets alone would reduce health system spending (public and private
combined) by $15 billion in 2022 (Holahan and Simpson 2021).
Introducing that same public option into both nongroup and employer
markets would reduce health system spending by $156 billion in 2022,
more than a 10-fold difference. Capping provider prices across both
markets at the same rates would reduce health system spending by more
than double that amount, $331 billion in 2022.
Lower prices applied to a smaller number of consumers will affect
overall provider revenues less, and thus the risk of health care
delivery system disruption is rather small. That means that reforms
using provider prices well below commercial levels only for public
option enrollees in the nongroup market would carry less risk of
delivery system disruption than broad caps on provider prices for all
insurers in both the employer group and nongroup insurance markets. But
the former reform would also achieve smaller aggregate savings than
would the latter.\6\ In addition, lower provider prices could limit the
number of providers willing to participate with these plans, especially
if the enrollees constitute a small percentage of the providers'
expected revenue.
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\6\ If a public option or capped provider prices were available
only in the nongroup market, these large price differences between the
employer and nongroup markets could, at least theoretically, pressure
more people to seek nongroup insurance coverage and decrease incentives
for some employers to provide insurance. However, evidence shows the
provider prices in nongroup insurance markets made competitive by
Affordable Care Act reforms are considerably lower than prices in
employer markets, yet employer-provided coverage has not decreased. The
value of the tax subsidy provided for those with employer-based
insurance, benefits tailored to worker preferences, frequently broader
provider networks, and ease of enrollment seem to keep workers in their
employer-provided policies.
A more limited public option or capped prices targeted solely to
nongroup insurance consumers could also phase in lower prices more
quickly without significantly disrupting health-care delivery (Skopec
and Holahan 2021). Conversely, the larger the share of health-care
consumers affected by lower prices, the longer it will likely take for
health-care providers to respond with the organizational changes
---------------------------------------------------------------------------
necessary to preserve supply and quality.
One policy option that has been discussed is creating a public
option solely to provide coverage for adults with low incomes caught in
the Medicaid eligibility gap. In the 12 States that continue to refuse
to expand Medicaid eligibility under the Affordable Care Act, more than
3 million uninsured people living in poverty are ineligible for any
financial assistance to enroll in insurance coverage, because their
incomes are too low to qualify for Marketplace subsidies but too high
to be eligible for their States' traditional Medicaid programs
(Simpson, Banthin, and Buettgens 2021). Because the population in the
eligibility gap in these States is largely uninsured today, providing
them coverage through a federal public option, even one paying Medicare
rates, would put additional revenue into the health care delivery
system, not less. Consequently, such a narrow program should not risk
significantly disrupting health-care delivery.
Interaction of Provider Price Schedule and Network Breadth
In recent years, many nongroup insurers have built narrow provider
networks to be able to offer price-competitive plan options to
consumers (Wengle et al. 2020). Including only health-care providers
willing to take lower prices in a provider network translates into
lower insurance premiums. Creating broader provider networks generally
requires paying some providers at higher prices or having some other
type of purchasing leverage that attracts more providers to
participate.\7\
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\7\ For example, the traditional Medicare program offers enrollees
a very broad network of providers, even though it pays providers at
rates below those of commercial insurers, because few providers can
turn down the large volume of Medicare enrollees and their high average
use of medical services.
Consequently, ensuring voluntary participation of a broad network
of providers is difficult if a public option pays providers
substantially below typical commercial prices. Relying on voluntary
provider participation will most likely lead to a trade-off between
network breadth and premium savings. Requiring providers participating
with the Medicare program (or the Medicaid program) to also participate
in the public option may increase provider participation, even at
relatively low payment levels. However, this could also risk some
providers leaving the Medicare or Medicaid programs instead. In
addition, physician participation is difficult to enforce. Thus, one
option is to require hospitals to participate, say, as a requirement of
participation in the Medicare program, but not requiring the same of
physicians. Because all hospitals participate with the Medicare and
Medicaid programs and those programs constitute a large share of
hospital revenues, hospitals are far less likely to stop participating
in those programs, even if public option participation is tied to them.
The most challenging network breadth issue is related to physicians in
this context. Failing to enforce consequences for physicians declining
to participate with the public option could lead to a significantly
---------------------------------------------------------------------------
narrower provider network than envisioned, however.
Another option for increasing physician participation is
prohibiting physicians who decline to participate with the public
option from participating in other plans serving that same market.\8\
For example, if a public option were introduced into the nongroup
market in a given area, a physician refusing to participate in the
public option would be prohibited from participating with the private
nongroup insurers offering coverage in that area. If physicians'
decisions not to participate with the public option depend on their
desires to protect their pricing leverage with private insurers, this
approach could significantly increase physician participation. In
addition, it would not risk a decrease in Medicare or Medicaid
participation. The same approach could be used for hospitals as well.
---------------------------------------------------------------------------
\8\ This approach is discussed in Fiedler (2020) and (2021).
Capping provider prices for commercial insurers at low levels
raises similar concerns about physician participation. However, if
providers are reticent to participate with the public option over
concerns that doing so could jeopardize their pricing negotiation
leverage with private insurers, capping prices for all insurers in a
given market minimizes participation concerns. In general, though, the
larger the number of insured people in the markets where the caps are
implemented, the harder it is for physicians to avoid accepting those
prices. For example, capping commercial prices in the nongroup market
alone would affect physician revenues less than would capping them in
the nongroup and employer group markets, because the employer insurance
markets are so much larger. But at the same time, physicians can more
easily refuse to participate with nongroup insurers than they can
refuse to take patients with employer-based insurance, because the
number of enrollees in the former is so much smaller than the number in
the latter.
Provider Payment Schedules and the Interaction of a Public Option with
Capped Prices for Commercial Insurers
At least theoretically, the reach of a public option is smaller than
that of capped provider prices for commercial insurers. The primary
effect of a public option would be on the people who choose to enroll
in it, though some evidence shows that a public option could alter the
dynamics of provider-insurer negotiations and lead to somewhat lower
private insurer prices as well, particularly in highly concentrated
markets (Blumberg et al. 2019). Capping commercial insurer prices,
depending on where the rates are set, could affect all commercial
insurance enrollees to some degree, thereby affecting a larger group of
people and potentially to a greater extent. Consequently, the prices
used for a public option could be set below capped prices for all
commercial insurers. Either of these policies could be implemented
alone or together, using different price schedules for the two
strategies. With such an approach, the public option can provide
broadly available insurance options designed by the government and not
motivated by profit, whereas the capped prices play the central cost-
containment role and somewhat improve equity of payments among
providers and markets.
Additional Design Considerations for a Public Option
Though capping provider prices used by commercial insurers has various
benefits, as noted earlier, it is primarily designed to lower insurance
premiums. This is achieved by either reducing the most extreme prices,
by setting capped prices at a higher point in the price distribution,
or by reducing prices more broadly, by setting the capped prices at a
lower point in the price distribution. Capped provider payments do not,
however, provide an insurance product that is not subject to profit
motives or other private entities' interests. To address the latter, a
government-designed and administered plan, the public option, is
needed. Because it would create a new public source of insurance, a
public option would require additional design considerations beyond the
prices the plan pays to providers.
State Variation in Essential Health Benefit Requirements
Although the 10 categories of essential health benefits defined in the
Affordable Care Act must be covered in each state's nongroup and small-
group markets, the rules surrounding benefit definitions and the
quantity limits on some of these benefits vary (dollar limits on
benefits are prohibited, however). Benefits covered by a public option
could be made uniform nationally or could vary modestly by state to be
consistent with the other qualified health plans sold in each state.
Though a public option offering a uniform set of benefits ensures
everyone in the country has access to at least one plan, offering a
public option plan (or plans) that differs from the other plans offered
in the markets where the public option is sold carries significant
risks. Benefit variations can make it more difficult for consumers to
compare their options, but more importantly, they can lead to adverse
selection either into the public option or private plans. To the extent
that either the public option's or private plans' benefits in a state
are more or less attractive to higher-risk enrollees, the risk-
adjustment system may be unable to completely compensate for the
difference. Consequently, if uncorrected adverse selection escalates
premiums in the plan(s) selected against, the public option or the
private health plans may be unable to compete for consumers in the long
term.
Actuarial Value Tier Participation
Likewise, if no private insurers offer a particular actuarial tier of
coverage (current law only requires insurers to offer silver and gold
levels), introducing a public option in that tier could create
selection problems. For example, a significant number of Marketplace
rating areas currently lack an insurer offering a platinum (90 percent
actuarial value) option, largely because these high-value plans are
felt to attract enrollees with higher medical needs. If a platinum
public option were introduced in these areas, all else staying the
same, it could attract enrollees with higher-than-average health-care
costs. Given the imperfection of risk adjustment, this outcome could
make it hard for the public option to compete with private insurers in
the area.\9\
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\9\ If, however, the premium tax credit benchmark plan were changed
to gold (instead of the current silver) under broader reforms, platinum
plans could be much more attractive, leading more private insurers to
offer them.
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Level Playing Field Issues
The politics of the public option are also extremely challenging. Many
consumer advocates' distaste for for-profit commercial insurance leaves
them uninterested in designing a system that provides these insurers
with the level playing field they feel they need to compete with a
public option. In other words, some are happy to let an uneven playing
field lead to a fully public system, like Medicare for All. Meanwhile,
the private insurers with which a public option would compete are
focused on any possible unfair advantages a government insurer would
have over them in their markets. And, in truth, a large financial
advantage that allows a public option to set its premiums well below
those of private insurers could drive at least some current private
options out of the markets--for better or for worse, depending on one's
perspective. Beyond the core component of provider payments discussed
above, at least four categories of expenses can affect the extent to
which a public option competes with private insurers on a level playing
field: risk adjustment, premium taxes, reserve funds, and start-up and
management costs.
Risk adjustment. In nongroup insurance markets, risk adjustment
reallocates a portion of insurers' premium revenues to compensate
insurers that disproportionately enroll people with higher-than-average
health-care costs in a year. The objective of this strategy is to allow
all insurers to set premiums in a manner that reflects the average risk
of the entire pool of people enrolled in nongroup insurance in the
state, enabling insurers with higher-cost enrollees to remain
attractive and affordable to potential enrollees with various medical
needs. Risk adjustment also undermines the incentives for insurers to
attempt to enroll healthier people and to dissuade people with greater
medical needs from enrolling in their plans.
Consequently, creating a level playing field within an insurance
market that includes a public option would require that the public
option participate in the risk-adjustment system. It is unclear a
priori whether a public option would attract disproportionately healthy
or sick enrollees, or neither. Therefore, excluding the public option
from the system could help or hurt private insurers and similarly
increase or decrease actuarially fair premiums associated with the
public option based on the risk profile of those enrolled. In turn,
this could make it difficult, if not impossible, for either the public
option or private insurers to remain viable.
Likewise, including the public option in risk adjustment could
result in the government plan making payments to some private insurers
or vice versa. The Affordable Care Act's risk adjustment payments are
calculated as a function of the differential risk of enrollees and the
average premium in a state. As such, if a public option were to lower
the average premium in a state, it would also lower the size of risk-
adjustment payments between insurers. This could disadvantage some
higher-priced private insurance plans should they be selected against,
which would benefit plans enrolling healthier people.
Premium taxes. Almost every state and the District of Columbia imposes
taxes on insurers' gross premium revenues. The most common tax rate is
2.5 percent, though such rates range as high as 4 percent (Grace,
Sjoquist, and Wheeler 2007). Usually, these taxes take the place of
corporate income taxes on insurers and are likely passed on to
consumers purchasing insurance through higher premiums.\10\
Consequently, private insurers would be at a direct pricing
disadvantage if equivalent taxes were not imposed on a public option
plan introduced in the state. Leveling the playing field to improve
private insurers' abilities to compete would therefore require the
public option to pay premium taxes as well.
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\10\ The precise incidence of premium taxes depends on elasticities
of demand and supply, which may differ by market and geography.
Reserve funds. Typically, state laws require insurers to maintain
reserve funds that ensure the company would be able to pay enrollee
claims even if premium revenue for the year fell short of actual
claims. States regulate the level of required surpluses, but they
typically range from 15 to 25 percent of expected annual claims.
Insurers cannot increase premiums in subsequent years to cover costs
associated with underestimates in prior years; doing so could run afoul
of medical loss ratio requirements, and insurers doing so would be
placed at a competitive pricing disadvantage. Though the federal
government could obviously use general revenues to cover any public
option shortfalls in a given year, doing so would create, at minimum, a
perception of an unfair competitive advantage from private insurers'
perspectives. Including small premium add-ons to build up reserve funds
for a public option may be unnecessary as a practical manner but could
---------------------------------------------------------------------------
enhance private insurers' sense of competitive fairness.
Start-up and ongoing administrative costs. The administrative costs
associated with starting a private insurance plan and supporting its
ongoing operations are generally recouped by the administrative load
added on to expected annual claims when computing premiums. These costs
include such necessities as provider network development, data
infrastructure development and maintenance, claims payment, and
customer service. The instinct with a public option may be to build off
the government's existing infrastructure for the Medicare and Medicaid
programs in the Centers for Medicare and Medicaid Services, for
example. Depending on one's perspective, using existing infrastructure
could be considered good savings or an unfair advantage, however.
Start-up costs could, for example, be amortized in the premium or
absorbed via general revenues along with those for the other existing
public insurance programs. Adding something small to the premiums to
account for a reasonable level of such costs may be unnecessary but,
again, could improve private insurers' perceptions of fairness.
Discussion
Public option advocates do not always share the same objectives for
establishing such a program. However, the central design choices
necessary to develop a public option are inextricably tied to the
intended objectives. The level and growth of payments to providers are
critical features of a public option, and these choices have tremendous
implications for premium affordability and cost-savings potential,
network breadth, and disruption to the health care delivery system.
Sufficient political support for a public option will likely require
greater agreement on such a program's objectives than is apparent
today; some people currently focus on a public option's cost-savings
potential, whereas others focus on the availability of a consumer-
motivated, instead of profit-motivated, broad-network plan.
As research has indicated (Holahan and Simpson 2021), a public
option alone has limited power to contain health care system costs
broadly, particularly when only made available in the nongroup
insurance market. It would, however, provide new competition in markets
dominated by monopolistic providers and/or insurers. It would also be a
new tool that could evolve into a valuable consumer-oriented,
administratively efficient entity that serves as an alternative
coverage option for those dissatisfied with their commercial insurance
options.
Capping provider prices paid by commercial insurers is primarily a
cost-
containment tool that could be implemented with or without a public
option. In the presence of a public option, capping commercial prices
paid to providers may allow private insurers to lower their premiums
and compete more effectively. Setting such caps at a relatively high
point in the provider price distribution (e.g., at approximately the
75th or 80th percentile) would primarily reduce the prices of outlier
plans, whereas setting the caps at a lower percentile would reduce
costs more broadly.
Regardless of the presence of a public option, caps on provider
prices would have the greatest effect when applied broadly to insurers
in the group and nongroup markets, as opposed to nongroup markets
alone. Caps could be set high initially, thereby lowering provider
prices and associated premiums only in the highest-priced markets to
start. Caps could then be lowered over time in conjunction with a
significant data collection and monitoring effort that could be used to
prevent provider price adjustments from significantly disrupting the
health care delivery system, a particularly important consideration if
the caps are implemented across all commercial insurers.
References
Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
2021. ``What If the American Rescue Plan's Enhanced Marketplace
Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
DC: Urban Institute.
Blumberg, Linda J. 2021. Comparing Public Option and Capped Provider
Payment Rate Proposals. Washington, DC: Urban Institute.
Blumberg, Linda J., John Holahan, Stacey McMorrow, and Michael Simpson.
2020. Estimating the Impact of a Public Option or Capping Provider
Payment Rates. Washington, DC: Urban Institute.
Blumberg, Linda J., John Holahan, Erik Wengle, and Caroline Elmendorf.
2019. ``Is There Potential for Public Plans to Reduce Premiums of
Competing Insurers?'' Washington, DC: Urban Institute.
Dunn, Abe, Joshua D. Gottlieb, Adam Shapiro, Daniel J. Sonnenstuhl, and
Pietro Tebaldi. 2021. ``A Denial a Day Keeps the Doctor Away.''
Working Paper 29010. Cambridge, MA: National Bureau of Economic
Research.
Fiedler, Matthew. 2020. Capping Prices or Creating a Public Option: How
Would They Change What We Pay for Health Care? Washington, DC:
Brookings Institution.
---. 2021. ``Designing a Public Option That Would Reduce Health Care
Provider Prices.'' Washington, DC: Brookings Institution.
Grace, Martin, David L. Sjoquist, and Laura Wheeler. 2007. ``Insurance
Premium Taxes.'' Paper presented at the 100th Annual Conference on
Taxation, Columbus, OH, November 15th.
Holahan, John, Jessica Banthin, and Erik Wengle. 2021. Marketplace
Premiums and Participation in 2021. Washington, DC: Urban
Institute.
Holahan, John, and Michael Simpson. 2021. ``Introducing a Public Option
or Capped Provider Payment Rates into Private Insurance Markets:
Updated Estimates.'' Washington, DC: Urban Institute.
Politico. 2020. ``Americans' Domestic Priorities for President Trump
and Congress in the Months Leading up to the 2020 Election.''
Washington, DC: Politico and Harvard University, T. H. Chan School
of Public Health.
Simpson, Michael, Jessica Banthin, and Matthew Buettgens. 2021. ``Most
Uninsured People Gaining Medicaid Eligibility under Potential
Expansion Would Have Incomes below the Federal Poverty Level.''
Washington, DC: Urban Institute.
Skopec, Laura, and John Holahan. 2021. ``Reducing Private Insurance
Hospital Payments Will Require a Lengthy Phase-In Period.''
Washington, DC: Urban Institute.
Wengle, Erik, Emily Curran, Brigette Courtot, Caroline Elmendorf, and
Kevin Lucia. 2020. ``Effects of Medicaid Health Plan Dominance in
the Health Insurance Marketplaces.'' Washington, DC: Urban
Institute.
Acknowledgments
This brief was funded by the Robert Wood Johnson Foundation. The views
expressed do not necessarily reflect the views of the Foundation.
The views expressed are those of the author and should not be
attributed to the Urban Institute, its trustees, or its funders.
Funders do not determine research findings or the insights and
recommendations of Urban experts. Further information on the Urban
Institute's funding principles is available at urban.org/
fundingprinciples.
The author thanks all the participants in the discussion on which
this paper is based: Michael Chernew, Jack Ebeler, Matt Fiedler,
Richard Frank, Sherry Glied, Tim Gronniger, John Holahan, Mark Miller,
and Cori Uccello. However, no particular statement should be attributed
to any of the participants or the organizations from which they are
affiliated. The author is also grateful for editorial assistance from
Rachel Kenney.
______
Urban Institute
The Uninsurance Rate Held Steady During the
Pandemic as Public Coverage Increased
Trends in Health Insurance Coverage Between March 2019 and April 2021
Michael Karpman and Stephen Zuckerman
August 2021
Rapid job losses in the early months of the COVID-19 pandemic raised
fears that millions of people would lose their health insurance
coverage and become uninsured (Banthin et al. 2020; Garfield et al.
2020; Garrett and Gangopadhyaya 2020). In previous recessions, laid-off
workers who lost employer-sponsored insurance (ESI) faced limited
coverage options through Medicaid and the private nongroup insurance
market and the number of people uninsured increased (Holahan and Chen
2011). The Affordable Care Act (ACA) significantly expanded access to
those options in 2014, driving the uninsurance rate to record lows
(ASPE 2021; Obama 2016). And as the pandemic posed the first test of
the post-ACA health insurance safety net during an economic downturn,
Congress further supported access to coverage by not allowing
disenrollment from Medicaid through the March 2020 Families First
Coronavirus Response Act (Brooks and Schneider 2020).\1\
---------------------------------------------------------------------------
\1\ The Families First Coronavirus Response Act has provided all
States with a temporary increase in federal matching funds for Medicaid
beneficiaries not in the ACA Medicaid expansion population. To receive
the higher rate, States must follow several maintenance-of-effort
requirements, including not disenrolling people from Medicaid unless
they request termination of coverage or move to a different state.
These provisions will remain in place at least until the end of the
calendar quarter when the secretary of health and human services
declares the end of the public health emergency.
In this brief, we examine changes in health insurance coverage
among nonelderly adults ages 18 to 64 during the pandemic using data
from the Urban Institute's Health Reform Monitoring Survey (HRMS).
Since it was launched in 2013, the HRMS has provided timely information
on coverage before data from federal surveys become available (Long et
al. 2014). Our analysis focuses on changes in coverage across three
rounds of the survey: March 2019; March/April 2020, just after the
pandemic caused a steep decline in employment; and April 2021, more
than 1 year after the secretary of health and human services declared a
national public health emergency on January 31, 2020. We estimate
regression-adjusted changes for the national nonelderly adult
population overall, by state Medicaid expansion status,\2\ and by
annual family income as a percentage of the federal poverty level
(FPL). We focus on adults with low incomes targeted by the ACA Medicaid
expansion (with incomes at or below 138 percent of FPL) and adults with
moderate incomes eligible for ACA Marketplace premium tax credits (with
incomes between 139 and 399 percent of FPL).\3\ We find the following:
---------------------------------------------------------------------------
\2\ The States that did not expand Medicaid by April 2021 are
Alabama, Georgia, Florida, Kansas, Mississippi, Missouri, North
Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas,
Wisconsin, and Wyoming. Wisconsin has used state funding to expand
eligibility to nonelderly adults with incomes up to the FPL. In other
nonexpansion States, parents generally must have very low incomes to
qualify for Medicaid, and nonpregnant, nondisabled adults who are not
parents living with dependent children are ineligible. In 2020, voters
in Missouri and Oklahoma approved ballot initiatives to expand Medicaid
by July 1, 2021. Oklahoma's expansion took effect as scheduled.
However, the Missouri legislature did not provide funding for the
expansion in the state budget, and the governor withdrew the state plan
amendment for the expansion. On July 22, 2021, the Missouri Supreme
Court ruled that the state must implement the Medicaid expansion. For
this analysis, we treat Missouri and Oklahoma as nonexpansion States
because they did not implement their expansions by April 2021.
\3\ Under the American Rescue Plan Act, many people with incomes
above 400 percent of FPL are eligible for premium tax credits, but
expanded eligibility is set to expire after 2022.
Between March 2019 and April 2021, the share of nonelderly
adults reporting ESI declined from 65.0 to 62.3 percent, a decrease of
approximately 5.5 million adults. The share reporting public coverage
increased from 13.6 to 17.5 percent, an increase of approximately 7.9
million adults. The national uninsurance rate held steady at
---------------------------------------------------------------------------
approximately 11 percent.
The share of adults reporting public coverage increased
between 2019 and 2021 in both States that had and had not expanded
Medicaid under the ACA (hereafter called expansion and nonexpansion
States). Such coverage increased from 14.9 to 19.2 percent in expansion
States and from 10.7 to 14.3 percent in nonexpansion States.
In Medicaid expansion States, the uninsurance rate was near 8
percent across all three study years. In nonexpansion States, the
uninsurance rate was higher in 2021 (18.2 percent) than in 2020 (16.5
percent) and 2019 (17.2 percent), though the difference between 2019
and 2021 was not statistically significant. Adults in nonexpansion
States were more than twice as likely as adults in expansion States to
be uninsured in 2021 (18.2 percent versus 7.7 percent).
Declines in ESI and increases in public coverage between 2019
and 2021 were concentrated among adults with low and moderate incomes.
Uninsurance rates among the national nonelderly adult population did
not change significantly for any income group examined.
The share of adults with low incomes reporting public coverage
increased in both expansion States (from 54.6 to 62.9 percent) and
nonexpansion States (from 30.4 to 37.3 percent) between 2019 and 2021.
More than one in three adults with low incomes in nonexpansion States
(37.7 percent) were uninsured in 2021, compared with about one in seven
of such adults in expansion States (14.5 percent).
Between 2019 and 2021, the rise in public coverage helped offset a
decline in ESI, and unlike in previous recessions, the uninsurance rate
did not change. Medicaid and, to a lesser extent, private nongroup
insurance sold through the Marketplaces have provided many adults with
coverage options following unprecedented job and income losses.
However, more than 1 in 10 adults were uninsured in April 2021,
including nearly 1 in 5 adults in nonexpansion States.
Maintaining the current uninsurance rate will require protecting
coverage for current and prospective Medicaid enrollees as the economy
improves and the disenrollment freeze is lifted (which is unlikely to
occur before early 2022). Adults eligible for Medicaid may be at risk
of having their applications or renewals erroneously rejected if States
resume normal operations for reviewing eligibility too rapidly
(Rosenbaum, Handley, and Morris 2021). Other adults will no longer be
eligible for Medicaid when their incomes recover and will need to seek
private coverage to remain insured. For those without access to
affordable ESI, outreach efforts can raise their awareness of the
enhanced premium tax credits for Marketplace plans made available under
the March 2021 American Rescue Plan Act (Haley and Wengle 2021). States
will also need to assess eligibility for subsidized Marketplace
coverage for people losing Medicaid eligibility after the public health
emergency ends (Musumeci and Dolan 2021). Permanently extending the
American Rescue Plan Act's enhanced tax credits could further reduce
the number of uninsured people over the long term, and adults with
moderate incomes would experience the largest decline in uninsurance
(Banthin et al. 2021). Policymakers can also build on coverage gains
under the ACA by addressing the persistently high uninsurance rates
among adults with low incomes, particularly in nonexpansion States.
Results
Between March 2019 and April 2021, the share of nonelderly adults
reporting ESI declined and the share reporting public coverage
increased; the national uninsurance rate held steady.
Approximately 65 percent of nonelderly adults reported having ESI
coverage in March 2019 and March/April 2020 (figure 1).\4\ This share
had declined to 62.3 percent by April 2021, when many adults remained
out of work just over 1 year after the pandemic recession began.\5\ The
2.7 percentage-point decline in ESI between 2019 and 2021 represents a
decrease of approximately 5.5 million adults (95 percent confidence
interval: 2.5 million, 8.5 million).\6\ During this period, the share
of adults reporting public coverage--including Medicare, Medicaid, the
Children's Health Insurance Program (CHIP), and other state or
government plans based on income or disability \7\--increased from 13.6
percent in 2019 to 17.5 percent in 2021, representing an increase of
approximately 7.9 million adults (95 percent confidence interval: 5.4
million, 10.4 million).\8\
---------------------------------------------------------------------------
\4\ Coverage estimates often vary across surveys because of
differences in survey design (Au-Yeung and Hest 2019). In this brief,
we discuss statistically significant changes in coverage over the study
period. Previous analyses have found HRMS estimates of coverage changes
to be consistent with estimates from other surveys (Karpman and Long
2015).
\5\ U.S. Bureau of Labor Statistics, ``The Employment Situation--
May 2021,'' news release, June 4, 2021, https://www.bls.gov/
news.release/pdf/empsit.pdf.
\6\ We multiplied the estimated 2.7 percentage-point change in ESI
between March 2019 and April 2021 by the projected number of adults
ages 18 to 64 in 2021. We used national population predictions from the
U.S. Census Bureau stratified by race, ethnicity, and sex for people of
all ages from 2016 to 2060, based on estimated birth, death, and net
migration rates over the period. Using the ``main series'' file, we
summed the 2021 population projections for all nonelderly adults to
arrive at 203,018,143 such adults that year. See ``2017 National
Population Projections Datasets,'' U.S. Census Bureau, February 20,
2020, https://www.census.gov/data/datasets/2017/demo/popproj/2017-
popproj.html.
\7\ In this brief, we combine Medicare, Medicaid, CHIP, and other
government- or state-
sponsored health plans into a single measure of public coverage because
survey respondents may confuse the names of these coverage types
(Pascale 2008). For a previous fact sheet based on data from the March/
April 2020 HRMS and the Urban Institute's September 2020 Coronavirus
Tracking Survey, we excluded Medicare from estimated changes in public
coverage (Karpman and Zuckerman 2020). Estimates in this brief also
differ slightly from estimates in that analysis because of differences
in the survey weights and the regression adjustment, which we describe
in the Data and Methods section.
\8\ Administrative data show an increase of approximately 6 million
adults enrolled in Medicaid between February 2020 and January 2021 in
the 49 States and DC that report adult and child enrollment separately
(Corallo and Rudowitz 2021). Differences between the HRMS estimates of
changes in public coverage and administrative data for Medicaid
enrollment may reflect several factors, including differences in the
study period; inclusion of 18-year-olds as adults in the HRMS;
inclusion of Medicare, CHIP, and state programs other than Medicaid in
the definition of public coverage in the HRMS; survey sampling error;
and measurement error in coverage type reported in the survey.
We did not observe a statistically significant change in private
nongroup coverage, which approximately 8 percent of adults reported in
each year and includes plans purchased through and outside the ACA
Marketplaces.\9\ But the share of adults with unspecified coverage
(i.e., reporting the name of a comprehensive health plan but not the
type of coverage) declined by 1.1 percentage points between 2019 and
2021.\10\ The share of adults with unspecified coverage was also
slightly higher in 2019 than in March 2018, suggesting an anomalous
result in 2019 (data not shown). Despite the significant loss of ESI,
the uninsurance rate held steady nationally at approximately 11 percent
in each study year.
---------------------------------------------------------------------------
\9\ The number of people selecting Marketplace plans increased from
11.4 million during the 2019 open enrollment period (November 1-
December 15, 2018) to approximately 12 million during the 2021 open
enrollment period (November 1-December 15, 2020). The Centers for
Medicare and Medicaid Services reported an additional 940,000 people
enrolled in Marketplace coverage during the special enrollment period
between February 15 and April 30, 2021, compared with 266,000 and
391,000 people who signed up through special enrollment periods based
on qualifying life events during the same periods in 2019 and 2020.
Though the 2021 special enrollment period was extended to August 15,
about half of new enrollment during the period's original time frame
(February 15-April 30, 2021) occurred in April. Thus, some of these
enrollments may have occurred after the HRMS was fielded. See ``2021
Open Enrollment Report,'' Centers for Medicare and Medicaid Services,
accessed June 30, 2021, https://www.cms.gov/files/document/health-
insurance-exchanges-2021-open-enrollment-report-final.pdf; and ``2021
Marketplace Special Enrollment Report,'' Centers for Medicare and
Medicaid Services, May 6, 2021, https://www.cms.gov/newsroom/fact-
sheets/2021-marketplace-special-enrollment-period-report-1.
\10\ The shares of adults with an unspecified coverage type were
2.3 percent in 2019, 1.4 percent in 2020, and 1.3 percent in 2021.
Net changes in ESI, public coverage, and private nongroup coverage
do not fully capture the transitions across coverage types that may
have occurred during the pandemic. Income losses made some adults
eligible for Medicaid and others eligible for subsidized Marketplace
coverage, regardless of whether they were previously covered by ESI.
The lack of net change in nongroup coverage could indicate that new
Marketplace enrollment among people who became eligible for premium tax
credits was not large enough to offset transitions from Marketplace or
non-
Marketplace nongroup coverage to Medicaid. In addition, the sample size
of the HRMS may not be large enough to detect statistical significance
for the relatively small changes in Marketplace enrollment found in
---------------------------------------------------------------------------
administrative data.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The share of adults reporting public coverage increased in both
Medicaid expansion and nonexpansion States.
As shown in figure 2, ESI coverage declined between 2019 and 2021 in
expansion States (from 67.0 to 64.6 percent) and nonexpansion States
(from 61.3 to 57.9 percent). But public coverage increased during this
period in both groups of States, from 14.9 to 19.2 percent in expansion
States and from 10.7 to 14.3 percent in nonexpansion States. These
patterns are consistent with Centers for Medicare and Medicaid Services
data showing rapid Medicaid enrollment growth in both expansion and
nonexpansion States during the pandemic (Corallo and Rudowitz 2021;
Khorrami and Sommers 2021).\11\
---------------------------------------------------------------------------
\11\ Joan Alker and Allie Corcoran, ``What Is Happening with
Medicaid Enrollment in Q1 of 2021?'' Say Ahhh! (blog), Georgetown
University Health Policy Institute, Center for Children and Families,
May 21, 2021, https://ccf.georgetown.edu/2021/05/21/what-is-happening-
with-medicaid-enrollment-in-q1-of-2021/.
The higher rates of public coverage in expansion States than in
nonexpansion States in both 2019 and 2021 largely reflect the former's
more generous eligibility for Medicaid; nearly all adults living in
expansion States with incomes below 138 percent of FPL are
eligible.\12\ In nonexpansion States, nondisabled, nonpregnant parents
typically must have very low incomes to qualify for Medicaid (e.g., 17
percent and 18 percent of FPL in Texas and Alabama) and nonparents are
ineligible.\13\ The increase in reported public coverage in
nonexpansion States over the study period was concentrated among the
groups most likely to be eligible for Medicaid or CHIP.\14\
---------------------------------------------------------------------------
\12\ Noncitizens' eligibility for Medicaid depends on several
factors, including whether they are lawfully present, considered
qualified noncitizens based on their immigration status, and subject to
the 5-year waiting period after receiving qualified status. See
``Coverage for Lawfully Present Immigrants,'' Centers for Medicare and
Medicaid Services, accessed June 30, 2021, https://www.healthcare.gov/
immigrants/lawfully-present-immigrants/.
\13\ ``State Health Facts: Medicaid and CHIP,'' Kaiser Family
Foundation, accessed June 30, 2021, https://www.kff.org/state-category/
medicaid-chip/medicaidchip-eligibility-limits/.
\14\ The increase in public coverage between 2019 and 2021 in
nonexpansion States was concentrated among the group of adults most
likely to be eligible for Medicaid or CHIP: 18-year-olds (who qualify
for Medicaid or CHIP based on eligibility thresholds for children),
adults living with children under 18 in the household (who potentially
qualify as parents or caregivers), and adults in Wisconsin, which has
used state funds to provide coverage to adults with incomes up to the
FPL (data not shown). The increase in public coverage for other adults
was statistically significant but small in magnitude.
The uninsurance rate in Medicaid expansion States was approximately
8 percent between 2019 and 2021. In nonexpansion States, the
uninsurance rate was higher in 2021 (18.2 percent) than in 2020 (16.5
percent) and 2019 (17.2 percent), though the difference between 2019
and 2021 was not statistically significant. As in prior years, adults
in nonexpansion States were more than twice as likely as adults in
expansion States to be uninsured in 2021 (18.2 versus 7.7 percent).
However, differences in uninsurance are not entirely attributable to
differences in Medicaid eligibility, because other factors (e.g.,
access to ESI, funding for outreach and enrollment assistance) likely
---------------------------------------------------------------------------
affect coverage status.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Declines in ESI and increases in public coverage between 2019 and
2021 were concentrated among adults with low and moderate incomes.
Adults with low and moderate incomes were hardest hit by the recession
(Karpman, Zuckerman, and Kenney 2020)\15\ and reported the largest
declines in ESI over the study period. Among adults with past-year
incomes at or below 138 percent of FPL, the share with ESI fell from
21.4 to 16.0 percent during this period (table 1). Among adults with
incomes between 139 and 399 percent of FPL, the share with ESI fell
from 64.5 to 60.0 percent. We did not find a statistically significant
change in ESI among adults with incomes at or above 400 percent of FPL.
---------------------------------------------------------------------------
\15\ ``Opportunity Insights Economic Tracker,'' Harvard University,
accessed July 14, 2021, https://www.tracktherecovery.org/.
Increased public coverage among adults with low incomes, from 45.0
to 52.6 percent, and those with moderate incomes, from 9.7 to 14.3
percent, helped offset declines in ESI among these groups. Most adults
must have incomes below 138 percent of FPL to qualify for Medicaid in
expansion States, and eligibility in nonexpansion States is limited to
parents with even lower incomes and generally nonexistent for nonparent
adults. However, eligibility is based on current monthly income,
meaning an adult whose annual family income in the past year was above
the eligibility threshold may qualify if they experience a loss of
---------------------------------------------------------------------------
income that places them below the threshold.
The uninsurance rate did not change significantly in any of the
income groups examined. Nearly one in four adults with low incomes
(23.7 percent) and about one in eight with moderate incomes (12.8
percent) were uninsured in April 2021.
TABLE 1. Health Insurance Coverage among Adults Ages 18 to 64, by Family
Income, March 2019 to April 2021
Percent
------------------------------------------------------------------------
Family income March 2019 March/April 2020 April 2021
------------------------------------------------------------------------
At or below 138%
of FPL
ESI 21.4 21.5 16.0***LLL
Public coverage 45.0 48.5** 52.6***LL
Private nongroup 6.8 5.5 5.6
coverage
Uninsured 24.3 22.4 23.7
139-399% of FPL
ESI 64.5 64.0 60.0***LLL
Public coverage 9.7 10.8 14.3***LLL
Private nongroup 11.3 10.8 11.8
coverage
Uninsured 11.8 12.9 12.8
At or above 400%
of FPL
ESI 86.9 88.1 87.8
Public coverage 1.5 1.6 2.1**
Private nongroup 6.1 5.8 5.3
coverage
Uninsured 3.6 3.5 3.7
------------------------------------------------------------------------
Source: Health Reform Monitoring Survey, March 2019 through April 2021.
Notes: FPL is federal poverty level. ESI is employer-sponsored
insurance. Estimates are regression adjusted. Estimates are not shown
for the share of adults with an unspecified coverage type, which is
between 1 and 3 percent across income groups and years.
*/**/*** Estimate differs significantly from that for March 2019 at the
0.10/0.05/0.01 level, using two-tailed tests.
L/LL/LLL Estimate differs significantly from that for March/April 2020
at the 0.10/0.05/0.01 level, using two-tailed tests.
The share of adults with low incomes reporting public coverage
increased in both Medicaid expansion and nonexpansion States between
2019 and 2021. More than one in three adults with low incomes in
nonexpansion States were uninsured in 2021, compared with about one in
seven of such adults in expansion States.
Among adults with incomes at or below 138 percent of FPL, the share
reporting public coverage increased from 54.6 to 62.9 percent in
Medicaid expansion States and from 30.4 to 37.3 percent in nonexpansion
States between 2019 and 2021 (table 2). The uninsurance rate for adults
with low incomes was statistically unchanged in both groups of States,
but wide disparities by Medicaid expansion status persisted. In 2021,
more than one in three adults with low incomes (37.7 percent) in
nonexpansion States were uninsured, compared with about one in seven
(14.5 percent) of such adults in expansion States. Adults with moderate
incomes in nonexpansion States were nearly twice as likely as those in
expansion States to be uninsured (17.8 versus 10.1 percent).
TABLE 2. Health Insurance Coverage among Adults Ages 18 to 64, by State Medicaid Expansion Status and Family
Income, March 2019 to April 2021
----------------------------------------------------------------------------------------------------------------
Percent Expansion States Nonexpansion States
----------------------------------------------------------------------------------------------------------------
March/ March/
Family income March April April 2021 March April April 2021
2019 2020 2019 2020
----------------------------------------------------------------------------------------------------------------
At or below 138% of FPL
ESI 20.7 21.2 15.7***LLL 22.7 22.2 16.2*LLL
Public coverage 54.6 57.3 62.9***LLL 30.4 34.3 37.3**
Private nongroup coverage 5.3 3.7** 4.4 8.8 8.3 7.6
Uninsured 16.5 15.0 14.5 36.3 34.3 37.7
139-399% of FPL
ESI 65.4 64.8 61.2**LLL 63.1 62.6 57.7***LL
Public coverage 11.4 12.2 16.6***LLL 6.2 8.0* 10.3***LL
Private nongroup coverage 11.5 10.7 11.3 10.9 10.8 12.9
Uninsured 9.3 10.8 10.1 16.8 16.8 17.8
At or above 400% of FPL
ESI 87.9 88.3 88.4 84.6 87.3** 86.4
Public coverage 1.3 1.5 2.1*** 2.2 1.8 2.5
Private nongroup coverage 5.9 5.7 5.5 6.5 6.1 4.9***
Uninsured 2.9 3.2 3.0 4.9 4.2 5.3
----------------------------------------------------------------------------------------------------------------
Source: Health Reform Monitoring Survey, March 2019 through April 2021.
Notes: FPL is federal poverty level. ESI is employer-sponsored insurance. Medicaid expansion States implemented
expansions by April 2021. Estimates are regression adjusted. Estimates are not shown for the share of adults
with an unspecified coverage type, which is between 0 and 3 percent across income levels, state groups, and
years.
*/**/*** Estimate differs significantly from that for March 2019 at the 0.10/0.05/0.01 level, using two-tailed
tests.
L/LL/LLL Estimate differs significantly from that for March/April 2020 at the 0.10/0.05/0.01 level, using two-
tailed tests.
Discussion
Despite losses of jobs, income, and ESI during the pandemic, the
uninsurance rate did not change between March 2019 and April 2021.
Increased public coverage helped counter ESI losses, protecting many
adults from becoming uninsured both in Medicaid expansion and
nonexpansion States. But in April 2021, the uninsurance rate in
nonexpansion States was higher than it had been in March/April 2020 and
was more than double the uninsurance rate in expansion States.
The growth in public coverage reflects several factors, including
expanded Medicaid eligibility under the ACA that has strengthened the
safety net in 37 States and the District of Columbia, the freeze on
Medicaid disenrollment under the Families First Coronavirus Response
Act, and the historic pattern of rising Medicaid enrollment during
recessions (Corallo and Rudowitz 2021).\16\ Assessing how each factor
has affected coverage during the pandemic is beyond the scope of this
brief. However, the study findings highlight several challenges and
opportunities for protecting and expanding coverage in the near term.
---------------------------------------------------------------------------
\16\ Alker and Corcoran, ``What Is Happening with Medicaid
Enrollment in Q1 of 2021?'' Say Ahh!.
Though the public health emergency and Medicaid disenrollment
freeze will likely be extended at least until early 2022,\17\ States
will need to process a backlog of coverage renewals and
redeterminations when the freeze is lifted (Musumeci and Dolan 2021).
Resuming normal operations too quickly could lead to a surge in
erroneously rejected applications and renewals, putting coverage at
risk for people who are eligible for Medicaid (Rosenbaum, Handley, and
Morris 2021). The Centers for Medicare and Medicaid Services recently
issued updated guidance stating Medicaid eligibility and enrollment
backlogs should be processed within 12 months of the end of the public
health emergency.\18\ The guidance also prohibits States from
terminating Medicaid coverage for people deemed ineligible during the
public health emergency until the state has completed an additional
redetermination of eligibility after the emergency ends. Finally, under
previous guidance from December 2020, the Centers for Medicare and
Medicaid Services expected States to prioritize eligibility and
enrollment actions for people most likely to no longer be eligible for
coverage (Musumeci and Dolan 2021). The updated guidance requires
States to consider how their approaches for processing these actions
will ensure continuity of coverage for eligible people and limit delays
for those who become newly eligible. State officials can begin
preparing for the end of the public health emergency now and avoid
terminating coverage based on outdated information for eligible
enrollees, many of whom experienced disruptions to their employment and
housing during the pandemic (Wagner 2020).
---------------------------------------------------------------------------
\17\ Norris Cochran (acting secretary, U.S. Department of Health
and Human Services), letter to governors regarding the public health
emergency, January 22, 2021, https://ccf.
georgetown.edu/wp-content/uploads/2021/01/Public-Health-Emergency-
Message-to-Governors.pdf.
\18\ Daniel Tsai (deputy administrator and director, Centers for
Medicare and Medicaid Services), letter to state health officials
regarding, ``Updated Guidance Related to Planning for the Resumption of
Normal State Medicaid, Children's Health Insurance Program (CHIP), and
Basic Health Program (BHP) Operations upon Conclusion of the COVID-19
Public Health Emergency,'' August 13, 2021, https://www.medicaid.gov/
federal-policy-guidance/downloads/sho-21-002.pdf.
Medicaid enrollees whose incomes have risen above the eligibility
threshold in their state will no longer qualify for coverage when the
disenrollment freeze expires. If such adults lack access to affordable
ESI, they will need to turn to the private nongroup market to remain
insured. The temporarily expanded Marketplace premium tax credits under
the American Rescue Plan Act will make Marketplace plans more
affordable, but some adults may not be aware of the availability of
zero-
premium or low-cost plans. Outreach and enrollment assistance can help
adults transition from Medicaid to Marketplace coverage and avoid
disruptions in care (Haley and Wengle 2021). State agencies will also
need to assess eligibility for subsidized Marketplace coverage and
other insurance affordability programs for adults who lose Medicaid
eligibility after the public health emergency ends (Musumeci and Dolan
---------------------------------------------------------------------------
2021).
The American Rescue Plan Act increased the subsidy amounts of
Marketplace premium tax credits, reducing the percentage of income
people have to pay toward premiums, and expanded eligibility for
premium tax credits to adults with incomes above 400 percent of FPL. If
Congress does not extend these changes, they will expire at the end of
2022. Making the enhanced subsidies permanent could reduce the number
of people uninsured in the longer term, and most of the coverage gains
would occur among adults with moderate incomes (Banthin et al. 2021).
Policymakers can further reduce uninsurance by addressing the high
uninsurance rates among adults with low incomes, particularly in the
remaining Medicaid nonexpansion States, where more than one-third of
adults with incomes at or below 138 percent of FPL are uninsured. The
American Rescue Plan Act provides these States with new incentives to
expand Medicaid by increasing the federal matching rate for regular
(i.e., nonexpansion) Medicaid populations for 2 years (Musumeci 2021).
If the nonexpansion States had adopted Medicaid expansion in 2020, 4.4
million fewer people would have been uninsured that year (Buettgens
2021). Federal policymakers are also considering approaches for closing
the Medicaid coverage gap in States that have not expanded eligibility
under the ACA.\19\
---------------------------------------------------------------------------
\19\ Rachel Roubein and Alice Miranda Ollstein, ``Plugging
Obamacare's Biggest Hole Poses Dilemma for Democrats,'' Politico, July
10, 2021, https://www.politico.com/news/2021/07/10/obamacare-medicaid-
coverage-gap-democrats-499013.
Additional health-care reforms, ranging from incremental
improvements to the ACA to more comprehensive approaches, can advance
the U.S. toward universal coverage, though they have different trade-
offs in costs, provider payment rates, and disruptions to the existing
health-care system (Blumberg et al. 2019).
Data and Methods
This brief draws on data from the Urban Institute's Health Reform
Monitoring Survey, a nationally representative, Internet-based survey
of adults ages 18 to 64. Launched in 2013, the HRMS provides timely
information on health insurance coverage, health-care access and
affordability, and other health topics before federal survey data
become available. For each round of the HRMS, we draw a stratified,
random sample of nonelderly adults from Ipsos's KnowledgePanel, the
nation's largest probability-based online panel. Members of the panel
are recruited from an address-based sampling frame covering
approximately 97 percent of U.S. households, including those without
Internet access. If needed, panel members are given Internet access and
web-enabled devices to facilitate their participation.
For this analysis, we used data from the March 2019, March/April
2020, and April 2021 rounds of the HRMS. The 2019 round was fielded
March 4 through 14; it had a sample size of 9,596 adults, and 91
percent completed the survey in the first week of fielding. The 2020
round was fielded March 25 through April 10; it had a sample size of
9,032 adults, and 75 percent completed the survey in the first week.
And the 2021 round was fielded April 2 through 20; it had a sample size
of 9,067 adults, and 82 percent completed the survey in the first week.
The 2019 round of the HRMS included an oversample of adults with
incomes below 138 percent of FPL. In 2020, we changed the survey's
design to include larger oversamples of adults in low- and moderate-
income households, nonwhite and
Hispanic/Latinx adults, and young adults. Survey weights adjust for
unequal selection probabilities and are poststratified to the
characteristics of the national nonelderly adult population, based on
benchmarks from the Current Population Survey and the American
Community Survey. Participants can take the survey in English or
Spanish, and the survey takes a median of 15 minutes to complete. The
margin of sampling error, including the design effect, for the full
sample of adults in the 2021 survey round is plus or minus 1.2
percentage points for a 50 percent statistic at the 95 percent
confidence level.
Health Insurance Coverage Measures
In all rounds of the HRMS, respondents received a question, adapted
from the American Community Survey, about their current health
insurance coverage. Respondents could report more than one type of
coverage, and those who did not report any coverage were asked to
verify if they have health insurance. We used additional follow-up
questions to determine whether respondents enrolled in their health
plan through the Marketplace, whether they enrolled in a private plan
through the Marketplace, whether they are covered under certain state
programs, and the name of the health plan for their main source of
coverage.
Because respondents could report more than one coverage type, we
established a hierarchy of responses to assign coverage types so that
coverage estimates sum to 100 percent: ESI/military coverage; public
coverage, including Medicare, Medicaid, and CHIP; private nongroup
coverage purchased through or outside the Marketplaces; and other
unspecified coverage. To address the challenges associated with
identifying health insurance coverage type in surveys (Call et al.
2013; Klerman et al. 2009; Pascale 2008; Pascale, Fertig, and Call
2019), we used a logical editing process to identify the most likely
type of health insurance coverage held by respondents, based on the
information they provided in the survey (Blavin, Karpman, and Zuckerman
2016). However, measurement error still occurs in survey estimates of
coverage type, particularly in reports of private nongroup coverage
(which can be purchased through government-run Marketplaces with public
subsidies) and Medicaid coverage (which is often provided through
private Medicaid managed-care plans).
Estimates from this brief are not directly comparable with
estimates from HRMS analyses from before 2020 because of a change in
the coverage editing process for respondents who reported having
insurance but did not report a specific coverage type and who did not
enroll in a health plan through the Marketplace. Under the previous
approach, these respondents were identified as insured with an
unspecified coverage type if they reported having a deductible. The
updated approach only assigns unspecified coverage to these respondents
if they report the name of a health plan that provides a valid form of
comprehensive health insurance coverage. Based on this update,
respondents reporting plans that do not offer comprehensive health
insurance (e.g., health care sharing ministries) are considered
uninsured, yielding slightly higher estimates of uninsurance in this
brief than in previous analyses of the HRMS. Under this updated
coverage editing approach, estimates of the share of uninsured
nonelderly adults in previous rounds of the HRMS would be 1 to 2
percentage points higher than under the previous approach. We applied
the updated coverage editing process consistently for all years of data
in this brief.
Analysis
Estimated changes in coverage are regression adjusted to control for
any changes in the demographic and socioeconomic characteristics of
respondents in each survey round not fully captured in the survey
weights. This allows us to remove variation in coverage caused by
changes in the observable characteristics of people responding to the
survey over time. We control for measures used in poststratification of
both the KnowledgePanel and the HRMS, including gender, age, race and
ethnicity, primary language, educational attainment, marital status,
presence of children in the household, household income, family income,
homeownership status, Internet access, urban/rural residence, and
region. We also control for citizenship status and participation in the
previous round of the survey. In presenting the regression-adjusted
estimates, we use the predicted rate of each coverage measure in each
year for the same nationally representative population. For this
analysis, we base the nationally representative sample on respondents
for the 2020 and 2021 rounds of the survey. We emphasize changes in
coverage that are statistically different from 0 at the 5 percent level
or lower and provide a 95 percent confidence interval for key estimates
of changes in the number of adults with selected coverage types.
Limitations
This analysis has several limitations. First, studies have found
significant measurement error in reported health insurance coverage
type across surveys (Call et al. 2013; Klerman et al. 2009; Pascale
2008; Pascale, Fertig, and Call 2019). We attempt to mitigate this
error using a logical editing process for coverage type that relies on
multiple data elements (Blavin, Karpman, and Zuckerman 2016). Second,
the probability-based internet panel underlying the HRMS does not cover
some adult populations, including those who are homeless, are
institutionalized, or do not speak English or Spanish. Third, the HRMS
has a low cumulative response rate, and nonresponse bias is likely only
partially mitigated by the survey weights. However, previous studies
assessing recruitment for the panel from which HRMS samples are drawn
have found little evidence of nonresponse bias for core demographic and
socioeconomic measures (Garrett, Dennis, and DiSogra 2010; Heeren et
al. 2008). Further, HRMS estimates of changes in coverage have been
consistent with estimates from federal surveys with larger samples
sizes, higher response rates, and stronger designs (Karpman and Long
2015). Finally, though nonresponse in federal surveys increased
significantly during the pandemic (Dahlhamer et al. 2021; Rothbaum and
Bee 2021), we find little change in nonresponse in the HRMS.
Probability-based internet panels could potentially have more stable
response patterns because panel members have previously agreed to
participate in surveys. However, the impact of the pandemic on these
types of surveys is not yet fully understood.
References
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Assistant Secretary for Planning and Evaluation). 2021. Health
Coverage under the Affordable Care Act: Enrollment Trends and State
Estimates. Washington, DC: U.S. Department of Health and Human
Services, Office of the Assistant Secretary for Planning and
Evaluation.
Au-Yeung, Caroline, and Robert Hest. 2019. ``Comparing Federal
Government Surveys That Count the Uninsured: 2019.'' Minneapolis:
State Health Access Data Assistance Center.
Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
2021. ``What If the American Rescue Plan's Enhanced Marketplace
Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
DC: Urban Institute.
Banthin, Jessica, Michael Simpson, Matthew Buettgens, Robin Wang, and
Linda J. Blumberg. 2020. ``Changes in Health Insurance Coverage Due
to the COVID-19 Recession: Preliminary Estimates Using
Microsimulation.'' Washington, DC: Urban Institute.
Blavin, Fredric, Michael Karpman, and Stephen Zuckerman. 2016.
``Understanding Characteristics of Likely Marketplace Enrollees and
How They Choose Plans.'' Health Affairs 35 (3): 535-39. https://
doi.org/10.1377/hlthaff.2015.0867.
Blumberg, Linda J., John Holahan, Matthew Buettgens, Anuj
Gangopadhyaya, Bowen Garrett, Adele Shartzer, Michael Simpson,
Robin Wang, Melissa Favreault, and Diane Arnos. 2019. From
Incremental to Comprehensive Health Reform: How Various Reform
Options Compare on Coverage and Costs. Washington, DC: Urban
Institute.
Brooks, Tricia, and Andy Schneider. 2020. ``The Families First
Coronavirus Response Act: Medicaid and CHIP Provisions Explained.''
Washington, DC: Georgetown University Health Policy Institute,
Center for Children and Families.
Buettgens, Matthew. 2021. ``Medicaid Expansion Would Have a Larger
Impact Than Ever during the COVID-19 Pandemic.'' Washington, DC:
Urban Institute.
Call, Kathleen T., Michael E. Davern, Jacob A. Klerman, and Victoria
Lynch. 2013. ``Comparing Errors in Medicaid Reporting across
Surveys: Evidence to Date.'' Health Services Research 48 (2 pt. 1):
652-64. https://dx.doi.org/10.1111%2Fj.1475-6773.2012.01446.x.
Corallo, Bradley, and Robin Rudowitz. 2021. ``Analysis of Recent
National Trends in Medicaid and CHIP Enrollment.'' San Francisco:
Kaiser Family Foundation.
Dahlhamer, James M., Matthew D. Bramlett, Aaron Maitland, and Stephen
J. Blumberg. 2021. ``Preliminary Evaluation of Nonresponse Bias Due
to the COVID-19 Pandemic on National Health Interview Survey
Estimates, April-June 2020.'' Hyattsville, MD: Centers for Disease
Control and Prevention, National Center for Health Statistics.
Garfield, Rachel, Gary Claxton, Anthony Damico, and Larry Levitt. 2020.
``Eligibility for ACA Health Coverage Following Job Loss.'' San
Francisco: Kaiser Family Foundation.
Garrett, Bowen, and Anuj Gangopadhyaya. 2020. ``How the COVID-19
Recession Could Affect Health Insurance Coverage.'' Washington, DC:
Urban Institute.
Garrett, Joe, J. Michael Dennis, and Charles A. DiSogra. 2010. ``Non-
response Bias: Recent Findings from Address-Based Panel
Recruitment.'' Presented at the Annual Conference of the American
Association for Public Opinion Research, Chicago, May 13-16.
Haley, Jennifer M., and Erik Wengle. 2021. ``Many Uninsured Adults Have
Not Tried to Enroll in Medicaid or Marketplace Coverage.''
Washington, DC: Urban Institute.
Heeren, Timothy, Erika M. Edwards, J. Michael Dennis, Sergei Rodkin,
Ralph W. Hingson, and David L. Rosenbloom. 2008. ``A Comparison of
Results from an Alcohol Survey of a Prerecruited Internet Panel and
the National Epidemiologic Survey on Alcohol and Related
Conditions.'' Alcoholism: Clinical and Experimental Research 32
(2): 222-29. https://doi.org/10.1111/j.1530-0277.2007.00571.x.
Holahan, John, and Vicki Chen. 2011. ``Changes in Health Insurance
Coverage in the Great Recession.'' Washington, DC: Kaiser
Commission on Medicaid and the Uninsured.
Karpman, Michael, and Sharon K. Long. 2015. ``QuickTake: HRMS
Benchmarks Well Against Gallup-Healthways and NHIS on Changes in
Health Insurance Coverage between 2013 and 2015.'' Washington, DC:
Urban Institute.
Karpman, Michael, and Stephen Zuckerman. 2020. ``ACA Offers Protection
as the COVID-19 Pandemic Erodes Employer Health Insurance
Coverage.'' Washington, DC: Urban Institute.
Karpman, Michael, Stephen Zuckerman, and Genevieve M. Kenney. 2020.
``Uneven Recovery Leaves Many Hispanic, Black, and Low-Income
Adults Struggling.'' Washington, DC: Urban Institute.
Khorrami, Peggah, and Benjamin D. Sommers. 2021. ``Changes in U.S.
Medicaid Enrollment during the COVID-19 Pandemic.'' JAMA Network
Open 4 (5): e219463. https://doi.org/10.1001/
jamanetworkopen.2021.9463.
Klerman, Jacob A., Michael Davern, Kathleen T. Call, Victoria Lynch,
and Jeanne D. Ringel. 2009. ``Understanding the Current Population
Survey's Insurance Estimates and the Medicaid `Undercount.' ''
Health Affairs 28 (6): w991-w1001. https://doi.org/10.1377/
hlthaff.28.6.w991.
Long, Sharon K., Genevieve M. Kenney, Stephen Zuckerman, Dana E. Goin,
Douglas Wissoker, Fredric Blavin, Linda J. Blumberg, Lisa Clemans-
Cope, John Holahan, and Katherine Hempstead. 2014. ``The Health
Reform Monitoring Survey: Addressing Data Gaps to Provide Timely
Insights into the Affordable Care Act.'' Health Affairs 33 (1):
161-67. https://doi.org/10.1377/hlthaff.2013.0934.
Musumeci, MaryBeth. 2021. ``Medicaid Provisions in the American Rescue
Plan Act.'' San Francisco: Kaiser Family Foundation.
Musumeci, MaryBeth, and Rachel Dolan. 2021. ``Key Issues for State
Medicaid Programs When the COVID-19 Public Health Emergency Ends.''
San Francisco: Kaiser Family Foundation.
Obama, Barack. 2016. ``United States Health Reform: Progress and Next
Steps.'' JAMA 316 (5): 525-32. https://doi.org/10.1001/
jama.2016.9797.
Pascale, Joanne. 2008. ``Measurement Error in Health Insurance
Reporting.'' Inquiry 45 (4): 422-37. https://doi.org/
10.5034%2Finquiryjrnl_45.04.422.
Pascale, Joanne, Angela R. Fertig, and Kathleen T. Call. 2019.
``Assessing the Accuracy of Survey Reports of Health Insurance
Coverage Using Enrollment Data.'' Health Services Research 54 (5):
1099-109. https://doi.org/10.1111/1475-6773.13191.
Rosenbaum, Sara, Morgan Handley, and Rebecca Morris. 2021. ``Winding
Down Continuous Enrollment for Medicaid Beneficiaries When the
Public Health Emergency Ends.'' New York: Commonwealth Fund.
Rothbaum, Jonathan, and Adam Bee. 2021. ``Coronavirus Infects Surveys,
Too: Survey Nonresponse Bias and the Coronavirus Pandemic.''
Washington, DC: U.S. Census Bureau.
Wagner, Jennifer. 2020. ``States Can Act Now to Keep Medicaid Enrollees
Covered When the Public Health Emergency Ends.'' Washington, DC:
Center on Budget and Policy Priorities.
Acknowledgments
This brief was funded by the Robert Wood Johnson Foundation. The views
expressed here do not necessarily reflect the views of the Foundation.
The views expressed are those of the authors and should not be
attributed to the Urban Institute, its trustees, or its funders.
Funders do not determine research findings or the insights and
recommendations of Urban experts. Further information on the Urban
Institute's funding principles is available at urban.org/
fundingprinciples.
The authors gratefully acknowledge Linda J. Blumberg, Matthew
Buettgens, and Jennifer M. Haley for helpful feedback and Rachel Kenney
for her careful editing.
______
Urban Institute
Extending the American Rescue Plan Act's Enhanced Marketplace
Affordability Provisions Could Benefit Nearly
1 Million Uninsured Children and Parents
Stacey McMorrow, Jessica Banthin, Matthew Buettgens, Michael Simpson,
Genevieve M. Kenney, and Clare Wang Pan
October 2021
Signed into law in March 2021, the American Rescue Plan Act (ARPA)
contained numerous provisions aimed at supporting recovery from the
COVID-19 pandemic and associated recession.\1\ Among these provisions
are changes to the subsidy schedule governing access to financial
assistance to purchase health insurance coverage in the Affordable Care
Act (ACA) Marketplaces. These changes give Americans access to greater
financial assistance purchasing coverage through 2022 and have the
potential to reduce uninsurance and make coverage more affordable for
those already purchasing nongroup coverage. Making these provisions
permanent is a topline priority in Senate Democrats' fiscal year 2022
budget resolution.\2\
---------------------------------------------------------------------------
\1\ American Rescue Plan Act, Pub. L. No. 117-2 (2021).
\2\ ``FY2022 Budget Resolution Toplines,'' U.S. Senate Democratic
Leadership, August 9, 2021, https://www.democrats.senate.gov/imo/media/
doc/Topline%20Summary%20of%20FY2022
%20Budget%20Resolution.pdf.
Though children were not the primary target of the ACA coverage
expansions or subsequent efforts to strengthen the ACA, recent
increases in children's uninsurance rates and the critical need to
address unmet health needs and catch up on forgone care during the
pandemic suggest that removing barriers to health care for children
could be particularly important in the coming years (Alker and Corcoran
2020; McMorrow et al. 2020; Gonzalez, Karpman, and Haley 2021). These
risks for children are also exacerbated by parents' rising uninsurance
rates and pandemic-related unmet health needs (Gonzalez et al. 2020;
---------------------------------------------------------------------------
Haley, Kenney, Wang Pan, et al. 2021).
Children may benefit from extending the ARPA's enhanced subsidies
if they gain coverage or their parents gain coverage or experience
premium or OOP cost savings (Wright Burak 2019). In this brief, we
consider the impacts of extending the enhanced subsidies on all
children and their parents and children under age 6 and their parents.
Using the Urban Institute's Health Insurance Policy Simulation Model
(HIPSM), we find the following:
Nearly 1 million uninsured children and parents, including
approximately 300,000 uninsured children, would gain insurance coverage
if ARPA subsidy enhancements were made permanent.
About 67,000 uninsured children who would gain coverage
through these provisions would be under age 6, and approximately
267,000 uninsured parents who would gain coverage would have a child
under age 6. This suggests even more young children could benefit when
their parents gain coverage.
Nearly two-thirds of the coverage gains for families would be
concentrated among children and parents with incomes between 200 and
400 percent of the federal poverty level (FPL).
If ARPA subsidy enhancements were made permanent, we project
that about 3.3 million children and 6.3 million parents would remain
uninsured in 2022, unless additional policy changes are introduced.
Most remaining uninsured children would be eligible for Medicaid or the
Children's Health Insurance Program, or CHIP (57.2 percent), or tax
credits (13.6 percent). But about 41.2 percent of parents would be
ineligible for subsidized coverage because of their immigration status
or residence in a state that has not expanded Medicaid under the ACA;
this represents approximately 2.6 million parents, including 636,000
uninsured parents who would become eligible for Medicaid if their state
were to expand Medicaid under the ACA.
Approximately 4.5 million children and parents who had
nongroup coverage before the ARPA would experience household premium
reductions of 28 percent per person, on average; those with incomes
below 200 percent of FPL would save even more, 41 percent per person.
Total household spending on premiums and OOP costs would fall by
averages of 18 percent per person overall and 25 percent per person in
families with income below 200 percent of FPL.
Background
The ACA expanded coverage options for millions of Americans, and though
such options focused largely on childless adults, children's and
parents' uninsurance also declined (Karpman et al. 2016). From 2013 to
2016, uninsurance fell from 7.0 to 4.3 percent among children and from
17.6 to 11.0 percent among parents (Haley, Kenney, Wang Pan, et al.
2021). In recent years, however, declines in children's and parents'
uninsurance have stalled (Haley et al. 2019, 2020), and uninsurance
increased for both groups in 2019 (Haley, Kenney, Wang Pan, et al.
2021). From 2018 to 2019, uninsurance increased from 4.8 to 5.2 percent
among children and from 11.2 to 11.7 percent among parents.
Thus, many families with children faced precarious health-care
access and affordability as the COVID-19 pandemic and resulting
recession took hold in 2020, and numerous families experienced
additional economic and health challenges in the ensuing months. Many
families with children lost jobs and incomes during the recession, but
parents who kept working through the pandemic also faced challenges
related to child care safety and availability (Karpman, Gonzalez, and
Kenney 2020). Both children and parents have reportedly faced
significant mental health challenges during the pandemic (Hamel et al.
2020; Panchal et al. 2021), as well as forgone and delayed care
(Gonzalez et al. 2020, 2021). As of now, no definitive estimates of the
number of children and parents who lost health insurance coverage
during the pandemic exist,\3\ but several protections have likely
prevented catastrophic coverage losses. Under the Families First
Coronavirus Response Act, for example, States became eligible for an
increase in federal Medicaid funding throughout the public health
emergency, so long as they maintain eligibility for those enrolled on
or after March 18, 2020. As the recovery continues and some of these
protections expire, it will be critical for families to be able to
access affordable coverage and care, especially given the urgent need
for children and parents to catch up on care they missed during the
pandemic. Moreover, both physical and mental health-care needs for
children and families may have increased because of the pandemic and
the associated stressors of remote learning and social isolation.
---------------------------------------------------------------------------
\3\ Joan Alker, ``Q: How Many Children Were Uninsured in 2020?''
Say Ahhh! (blog), Georgetown University Health Policy Institute, Center
for Children and Families, August 10, 2021, https://ccf.georgetown.edu/
2021/08/10/how-many-children-were-uninsured-in-2020/.
The ARPA included numerous provisions with the potential to benefit
families and children, including a child tax credit and efforts to make
insurance coverage more widely available and affordable (Acs and Werner
2021; Wheaton, Giannarelli, and Dehry 2021). The changes to the
Marketplace subsidy schedule were particularly important for children
and parents, especially those whose families may have lost jobs and
access to employer-sponsored insurance during the pandemic.
Specifically, premium contributions for those with incomes below 150
percent of FPL were reduced to zero; required premium contributions
were significantly reduced for those with incomes between 150 and 400
percent of FPL; and premium contributions were capped at 8.5 percent of
income for people with incomes above 400 percent of FPL, who were
previously ineligible for any subsidies (table 1). As under current
law, people not meeting immigration requirements and those with access
to an employer-sponsored plan deemed affordable under the ACA (i.e.,
with employee premiums at or below 9.8 percent of household income)
---------------------------------------------------------------------------
would remain ineligible for subsidies under extended ARPA subsidies.
TABLE 1. Subsidy Schedules under Current Law and the American Rescue
Plan Act, 2022
Premium contribution percentage-of-income limits for benchmark coverage
------------------------------------------------------------------------
Income (% of
FPL) Before ARPA Under ARPA
------------------------------------------------------------------------
< 138 2.07 0.0-0.0
138-150 3.10-4.14 0.0-0.0
150-200 4.14-6.52 0.0-2.0
200-250 6.52-8.33 2.0-4.0
250-300 8.33-9.83 4.0-6.0
300-400 9.83 6.0-8.5
400-500 n/a 8.5-8.5
500-600 n/a 8.5-8.5
600+ n/a 8.5-8.5
------------------------------------------------------------------------
Sources: Internal Revenue Service, Health and Human Services Department,
and American Rescue Plan Act of 2021, Pub. L. No. 117-2.
Notes: FPL is federal poverty level. ARPA is American Rescue Plan Act. n/
a is not applicable; people with incomes above 400 percent of FPL are
ineligible for subsidies under current law. Percentage-of-income caps
applied in 2022; current-law caps are for 2021 and indexed each year.
Annual adjustments to caps have been modest and are not made until
close to the end-of-year open enrollment period.
Children and their parents may benefit from these enhanced
affordability provisions in at least three ways. First, uninsured
children may gain coverage if subsidy enhancements allow families to
newly purchase coverage for children. Second, uninsured parents may
gain coverage with newly affordable options, and their already insured
children may benefit from the associated health and financial
improvements for their family (Wright Burak 2017). Finally, household
spending on premiums would decline for families who already had
nongroup coverage before the subsidy enhancements, which frees up
resources for other needs. Understanding these effects will provide
policymakers with insights for strengthening the health and financial
well-being of children and families and identify remaining gaps in
coverage affordability and accessibility.
Methods
We used the Urban Institute's Health Insurance Policy Simulation Model
to produce the estimates in this brief. HIPSM is a detailed
microsimulation model of the health-care system designed to estimate
the cost and coverage effects of proposed health care policy options.
The model simulates household and employer decisions and models the way
changes in one insurance market interact with changes in other markets.
Results from HIPSM simulations have been shown to be consistent with
actual policy outcomes and other respected microsimulation models
(Glied, Arora, and Solis-Roman 2015).
An earlier report modeled the effects of the ARPA's enhanced
subsidies on coverage for the entire nonelderly population in 2022
(Banthin et al. 2021). That simulation assumed the ARPA's changes to
the subsidy schedule were permanent and the changes were fully phased
in by 2022. In other words, consumers, employers, and insurers in the
model had fully adapted their decision making to the new schedule.
Additional details on the 2022 HIPSM baseline estimates, including
assumptions about the pandemic's economic effects, can be found in the
earlier report.
In this brief, we present estimates from the same simulation for
children and parents overall and young children and their parents. We
describe changes in the coverage distribution for children and parents
under the enhanced subsidy schedule, and we consider changes in
premiums and OOP spending for families who had nongroup coverage before
the ARPA. Children are those ages 18 and younger and parents are
nonelderly adults (ages 19 to 64) with a child in their tax unit. We
produce estimates for young children ages 5 and younger and their
parents because of the importance of early childhood to future health
and well-being.
This analysis has some limitations. First, assumptions about
population, income, and health cost growth are always somewhat
uncertain, but the additional uncertainty associated with the current
economic recovery and frequently changing
pandemic-related policies exacerbate the issue. For example, the
current projections assume the Medicaid maintenance-of-effort
provisions will expire in early 2022, and States have up to 12 months
to complete the redetermination process.\4\ It is impossible to predict
how quickly individual States will work through verifications,
redeterminations, and renewals, however, so Medicaid enrollment may be
higher in 2022 than these estimates indicate. In addition, our
definition of parents excludes noncustodial parents and some unmarried
parents living together with their children but assigned to different
tax units.
---------------------------------------------------------------------------
\4\ Daniel Tsai (Deputy Administrator and Director, Center for
Medicaid and CHIP Services, Centers for Medicare and Medicaid
Services), letter to state health officials, regarding ``Updated
Guidance Related to Planning for the Resumption of Normal State
Medicaid, Children's Health Insurance Program (CHIP), and Basic Health
Program (BHP) Operations upon Conclusion of the COVID-19 Public Health
Emergency,'' August 13, 2021, https://www.medicaid.gov/federal-policy-
guidance/downloads/sho-21-002.pdf.
---------------------------------------------------------------------------
Results
If the ARPA's enhanced subsidies were made permanent, we find that the
number of uninsured children would fall by approximately 303,000, and
the number of uninsured parents would fall by about 686,000 (figure 1).
The number of uninsured young children would fall by about 67,000, and
about 267,000 parents of young children would gain coverage.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Uninsurance rates would drop from 4.6 to 4.2 percent for
children and from 10.8 to 9.8 percent for parents (table 2). The
increases in private nongroup coverage, of 0.5 and 1.2 percentage
points for children and parents, are the key drivers of the projected
decline in uninsurance. Young children have somewhat lower uninsurance
rates than children overall, whereas their parents have somewhat higher
uninsurance rates than parents overall both before and under the
permanent ARPA subsidy schedule. But, the projected effects of the
subsidies on young children and their parents are similar to those for
parents and children overall; for both groups, reductions in
uninsurance under the ARPA would be largely offset by gains in private
nongroup coverage.
TABLE 2. Coverage Distribution of Children and Parents before and under a Permanent ARPA Marketplace Premium
Subsidy Schedule, 2022
----------------------------------------------------------------------------------------------------------------
Children ages 18 and younger Parents of children ages 18 and
------------------------------------- younger
------------------------------------
Before Under Percentage- Before Under Percentage-
ARPA (%) ARPA (%) point change ARPA (%) ARPA (%) point change
----------------------------------------------------------------------------------------------------------------
Employer 46.0 45.9 -0.1 60.2 60.0 -0.2
Private nongroup 1.7 2.2 0.5 4.8 6.0 1.2
Medicaid/CHIP 45.1 45.1 0.1 21.4 21.5 0.1
Other public 1.8 1.8 0.0 2.2 2.2 0.0
Noncompliant nongroup 0.8 0.7 -0.1 0.6 0.5 -0.1
Uninsured 4.6 4.2 -0.4 10.8 9.8 -1.1
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Children ages 5 and younger Parents of children ages 5 and
------------------------------------- younger
------------------------------------
Before Under Percentage- Before Under Percentage-
ARPA (%) ARPA (%) point change ARPA (%) ARPA (%) point change
----------------------------------------------------------------------------------------------------------------
Employer 42.1 42.1 0.0 55.9 55.7 -0.2
Private nongroup 1.3 1.7 0.4 4.1 5.2 1.1
Medicaid/CHIP 50.3 50.3 0.0 25.3 25.4 0.1
Other public 2.1 2.1 0.0 2.1 2.1 0.0
Noncompliant nongroup 0.7 0.7 -0.1 0.6 0.5 -0.1
Uninsured 3.4 3.1 -0.3 12.0 11.0 -0.9
----------------------------------------------------------------------------------------------------------------
Source: Urban Institute Health Insurance Policy Simulation Model, 2021.
Notes: ARPA is American Rescue Plan Act. CHIP is Children's Health Insurance Program. Estimates may not add to
100 percent because of rounding.
If the ARPA subsidies were made permanent, the declines in
uninsurance would be concentrated among children and families with
incomes between 200 and 400 percent of FPL (figure 2). Of the
approximately 303,000 children who would gain coverage, about 198,000
would live in families with moderate incomes. About 443,000 of the
686,000 parents expected to gain coverage would have incomes in this
range. An additional 75,000 children and 139,000 parents expected to
gain coverage would have incomes above 400 percent of FPL. These
patterns are similar for young children and their parents. However,
compared with all parents, a slightly larger share of parents of young
children gaining coverage would have incomes between 138 and 200
percent of FPL.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
If the ARPA subsidy schedule were made permanent and no other
coverage changes were enacted, we project 3.3 million children and 6.3
million parents would remain uninsured in 2022 (figure 3). Among the
remaining uninsured children, we estimate about 57.2 percent would be
eligible for Medicaid or CHIP coverage and another 13.6 percent would
be eligible for Marketplace subsidies. About 29.2 percent of uninsured
children would be ineligible for publicly subsidized coverage,
including 15.2 percent ineligible because of their immigration status
and 14.0 percent ineligible because they have access to an affordable
employer offer of coverage.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
This distribution differs markedly for uninsured parents.
Compared with more than 70 percent of uninsured children, only 38.5
percent of uninsured parents would be eligible for Medicaid/CHIP (21.8
percent) or Marketplace subsidies (16.7 percent). Nearly one-third of
uninsured parents would be ineligible for publicly subsidized coverage
because of their immigration status, and another 10.1 percent (or about
636,000 parents) would be ineligible for having income below the FPL in
a state that did not expand Medicaid under the ACA. Finally, 20.2
percent of uninsured parents would be ineligible because they have
access to an affordable employer offer. These patterns are quite
similar to those for young children and their parents, except young
children are far less likely to be ineligible because of their
immigration status (data not shown).
Approximately 4.5 million children and parents who had nongroup
coverage before the ARPA could also benefit from the enhanced subsidies
through reductions in household premiums and OOP spending. Across all
income groups, these families would experience an average reduction in
premium spending of about 28 percent per person and an average
reduction in OOP spending of 4 percent per person; the overall
reduction in household spending would be 18 percent per person (figure
4). These cost savings would be larger for families with incomes below
400 percent of FPL. On average, families with incomes below 200 percent
of FPL would experience a 41 percent reduction in premiums per person
and a 7 percent reduction in OOP spending per person. Those with
incomes between 200 and 400 percent of FPL would experience an average
premium reduction of about 34 percent per person and an average OOP
spending reduction of about 11 percent per person. Total household
spending on premiums and OOP costs would decline by an average of 25
percent per person for those with incomes below 200 percent of FPL and
by 23 percent per person for those with incomes between 200 and 400
percent of FPL.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Discussion
This analysis finds that almost 1 million children and parents could
gain coverage under extension of the ARPA Marketplace subsidy
enhancements. These coverage gains would be concentrated among families
with incomes between 200 and 400 percent of FPL and would likely
improve access to needed care for children and parents in lower- and
moderate-income families. In addition to those directly gaining
coverage through the enhanced subsidies, many already insured children
will likely benefit if their uninsured parents gain coverage. Evidence
strongly suggests that parents having health insurance coverage has
both health and economic benefits for children and families (Wright
Burak 2017). Further, more than 4 million children and parents who had
nongroup coverage before the ARPA could experience significant
household premium and OOP cost savings, especially those with incomes
below 400 percent of FPL.
Both children's and parents' uninsurance rates were increasing
leading up to the pandemic (Haley, Kenney, Wang Pan, et al. 2021), and
many families with children were struggling to meet health care and
other basic needs (Karpman et al. 2018; Karpman, Kenney, and Gonzalez
2018). Since early 2020, pandemic-related job losses, fears of
coronavirus exposure, and associated concerns have contributed to
continued problems accessing needed health care and affording food,
housing, and other basic needs (Gonzalez et al. 2020, 2021; Gonzalez,
Karpman, and Haley 2021; Karpman et al. 2020; Karpman, Gonzalez, and
Kenney 2020). Though some of these concerns may ease as the pandemic
recedes and the economy recovers, new complications will likely arise
as pandemic protections run out and prepandemic inequities remain
unchanged. Thus, making the enhanced ARPA subsidies permanent will
provide much needed relief for many families struggling to afford
health insurance and health care, and the additional cost savings may
free up resources for other family needs.
Still, we project that more than 3 million children and 6 million
parents would remain uninsured in 2022 even if the ARPA subsides were
made permanent. Congress and the Biden administration are tackling
several of the remaining barriers to coverage identified in this
analysis. First, a federal program targeting people in the Medicaid
coverage gap has been identified as a priority in Senate Democrats'
fiscal year 2022 budget resolution.\5\ Urban Institute estimates
indicate that in combination with the extension of the ARPA subsidies,
filling the Medicaid coverage gap would reduce the number of nonelderly
uninsured people by 7.0 million, or about 2.8 million more than
extending the ARPA subsidies alone (Banthin, Simpson, and Green 2021).
Our analysis suggests an estimated 636,000 uninsured parents with
incomes below the FPL in the 12 States that have not yet expanded
Medicaid under the ACA would become eligible for subsidized coverage
under the Democrats' proposed reforms.
---------------------------------------------------------------------------
\5\ ``FY2022 Budget Resolution Toplines,'' Senate Democratic
Leadership.
Second, the Biden administration is committed to improving outreach
and enrollment efforts to ensure people are aware of their eligibility
for assistance and have the support needed to enroll.\6\ In addition to
the 2021 COVID-19 special enrollment period, which has resulted in at
least 2.5 million new Marketplace enrollees,\7\ the administration
intends to expand the 2022 open enrollment period by 30 days and to
invest $80 million in the navigator program. The latter will provide
outreach and enrollment assistance targeted to people of color; rural
communities; immigrant communities; people facing language,
transportation, or internet access barriers; and other underserved
populations. The administration has also proposed creating a special
enrollment period for certain consumers with low incomes who may be
eligible for the most generous Marketplace subsidies.\8\ Taken
together, these outreach and enrollment efforts could have meaningful
impacts for the 70 percent of uninsured children and nearly 40 percent
of uninsured parents who are already eligible for Medicaid or
Marketplace tax credits.
---------------------------------------------------------------------------
\6\ Katie Keith, ``ACA Round-Up: Navigator Grantees, GAO
Investigation, Contraceptive Mandate, and More,'' Health Affairs Blog,
September 1, 2021, https://www.healthaffairs.org/do/10.1377/
hblog20210901.961047/full.
\7\ Katie Keith, ``Marketplace Special Enrollment Reaches 2.5
Million; Administration Announces Health Care Reconciliation
Priorities,'' Health Affairs Blog, August 10, 2021, https://
www.healthaffairs.org/do/10.1377/hblog20210810.821428/full.
\8\ Centers for Medicare and Medicaid Services, ``CMS Proposed Rule
to Increase Americans' Access to Health Coverage for 2022,'' news
release, June 28, 2021, https://www.cms.gov/newsroom/press-releases/
cms-proposed-rule-increase-americans-access-health-coverage-2022.
Changing the employer affordability provision, which restricts
otherwise eligible people from accessing Marketplace subsidies if they
have access to an employer plan that costs the employee less than 9.8
percent of their household income, could affect about 20 percent of
uninsured parents. One modest policy change would be eliminating the
``family glitch,'' which restricts eligibility for subsidized coverage
for the whole family even when the only affordable employer offer is
for a single employee plan. Analyses of such a proposal have not found
large effects on uninsurance, but they have found potential for
household cost savings (Buettgens and Banthin 2021). To further reduce
uninsurance for people affected by the employer affordability
provision, however, lowering or eliminating the affordability threshold
---------------------------------------------------------------------------
may be necessary.
Addressing immigration restrictions on receiving Medicaid and
Marketplace subsidies will also be critical to closing coverage gaps,
because almost one-third of uninsured parents are ineligible for
publicly subsidized coverage because of their immigration status.
Though the Biden administration reversed the Trump administration's
changes to the public charge rule that made many immigrant families
afraid to use public benefits for which they were eligible (Haley,
Kenney, Bernstein, et al. 2021), further efforts to expand eligibility
for affordable coverage to undocumented or otherwise ineligible
immigrants will be needed to achieve universal coverage. Finally,
children and families need far more than health insurance to thrive, so
ongoing attention to paid leave, child care, and educational and income
supports will also be critical to ensure all children and their
families have the opportunity for healthy, stable futures.
References
Acs, Gregory, and Kevin Werner. 2021. ``How a Permanent Expansion of
the Child Tax Credit Could Affect Poverty.'' Washington, DC: Urban
Institute.
Alker, Joan, and Alexandra Corcoran. 2020. Children's Uninsured Rate
Rises by Largest Annual Jump in More Than a Decade. Washington, DC:
Georgetown University Health Policy Institute, Center for Children
and Families.
Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
2021. ``What If the American Rescue Plan's Enhanced Marketplace
Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
DC: Urban Institute.
Banthin, Jessica, Michael Simpson, and Andrew Green. 2021. ``The
Coverage and Cost Effects of Key Health Insurance Reforms Being
Considered by Congress.'' Washington, DC: Urban Institute.
Buettgens, Matthew, and Jessica Banthin. 2021. ``Changing the `Family
Glitch' Would Make Health Coverage More Affordable for Many
Families.'' Washington, DC: Urban Institute.
Glied, Sherry A., Anupama Arora, and Claudia Solis-Roman. 2015. ``How
Well Did the CBO Forecast the Effects of the ACA?'' New York:
Commonwealth Fund.
Gonzalez, Dulce, Michael Karpman, and Jennifer M. Haley. 2021.
``Worries about the Coronavirus Caused Nearly 1 in 10 Parents to
Delay or Forgo Needed Health Care for Their Children in Spring
2021.'' Washington, DC: Urban Institute.
Gonzalez, Dulce, Michael Karpman, Genevieve M. Kenney, and Stephen
Zuckerman. 2021. ``Delayed and Forgone Health Care for Children
during the COVID-19 Pandemic.'' Washington, DC: Urban Institute.
Gonzalez, Dulce, Stephen Zuckerman, Genevieve M. Kenney, and Michael
Karpman. 2020. ``Almost Half of Adults in Families Losing Work
during the Pandemic Avoided Health Care Because of Costs or COVID-
19 Concerns.'' Washington, DC: Urban Institute.
Haley, Jennifer M., Genevieve M. Kenney, Hamutal Bernstein, and Dulce
Gonzalez. 2021. ``Many Immigrant Families with Children Continued
to Avoid Public Benefits in 2020, Despite Facing Hardships.''
Washington, DC: Urban Institute.
Haley, Jennifer M., Genevieve M. Kenney, Robin Wang, Clare Wang Pan,
Victoria Lynch, and Matthew Buettgens. 2019. Improvements in
Uninsurance and
Medicaid/CHIP Participation among Children and Parents Stalled in
2017. Washington, DC: Urban Institute.
Haley, Jennifer M., Genevieve M. Kenney, Clare Wang Pan, Robin Wang,
Victoria Lynch, and Matthew Buettgens. 2019. ``Progress in
Children's Coverage Continued to Stall Out in 2018.'' Washington,
DC: Urban Institute.
---. 2021. ``Uninsurance Rose among Children and Parents in 2019:
National and State Patterns.'' Washington, DC: Urban Institute.
Hamel, Liz, Audrey Kearney, Ashley Kirzinger, Lunna Lopes, Calley
Munana, and Mollyann Brodie. 2020. KFF Health Tracking Poll--July
2020. San Francisco: Kaiser Family Foundation.
Karpman, Michael, Jason A. Gates, Genevieve M. Kenney, and Stacey
McMorrow. 2016. ``Uninsurance among Parents, 1997-2014: Long-Term
Trends and Recent Patterns.'' Washington, DC: Urban Institute.
Karpman, Michael, Dulce Gonzalez, and Genevieve M. Kenney. 2020.
``Parents Are Struggling to Provide for Their Families during the
Pandemic: Material Hardships Greatest among Low-Income, Black, and
Hispanic Parents.'' Washington, DC: Urban Institute.
Karpman, Michael, Dulce Gonzalez, Stephen Zuckerman, and Gina Adams.
2018. ``What Explains the Widespread Material Hardship among Low-
Income Families with Children?'' Washington, DC: Urban Institute.
Karpman, Michael, Genevieve M. Kenney, and Dulce Gonzalez. 2018.
``Health Care Coverage, Access, and Affordability for Children and
Parents: New Findings from March 2018.'' Washington, DC: Urban
Institute.
Karpman, Michael, Stephen Zuckerman, Dulce Gonzalez, and Genevieve M.
Kenney. 2020. ``The COVID-19 Pandemic Is Straining Families'
Abilities to Afford Basic Needs: Low-Income and Hispanic Families
the Hardest Hit.'' Washington, DC: Urban Institute.
McMorrow, Stacey, Dulce Gonzalez, Clara Alvarez Caraveo, and Genevieve
M, Kenney. 2020. ``Urgent Action Needed to Address Children's Unmet
Health Care Needs during the Pandemic.'' Washington, DC: Urban
Institute.
Panchal, Nirmita, Rabah Kamal, Cynthia Cox, and Rachel Garfield. 2021.
``The Implications of COVID-19 for Mental Health and Substance
Use.'' San Francisco: Kaiser Family Foundation.
Wheaton, Laura, Linda Giannarelli, and Ilham Dehry. 2021. 2021 Poverty
Projections: Assessing the Impact of Benefits and Stimulus
Measures. Washington, DC: Urban Institute.
Wright Burak, Elizabeth. 2017. Health Coverage for Parents and
Caregivers Helps Children. Washington, DC: Georgetown University
Health Policy Institute, Center for Children and Families.
---. 2019. Parents' and Caregivers' Health Insurance Supports
Children's Healthy Development. Ann Arbor, MI: Society for Research
in Child Development.
Acknowledgments
This brief was funded by the David and Lucile Packard foundation. We
are grateful to them and to all our funders, who make it possible for
Urban to advance its mission.
The views expressed are those of the authors and should not be
attributed to the Urban Institute, its trustees, or its funders.
Funders do not determine research findings or the insights and
recommendations of Urban experts. Further information on the Urban
Institute's funding principles is available at urban.org/
fundingprinciples.
The authors are grateful to Julia Long for research assistance and
to Rachel Kenney for editorial assistance.
______
Questions Submitted for the Record to Linda J. Blumberg, Ph.D.
Questions Submitted by Hon. Ron Wyden
Question. The enhanced premium tax credits (PTCs) from the American
Rescue Plan (ARP) are already providing vital assistance to American
families to help them afford health insurance coverage on the
Affordable Care Act's (ACA's) Health Insurance Marketplaces. During the
Special Enrollment period for marketplace coverage this year, 2.8
million new customers signed up for coverage. The Centers for Medicare
and Medicaid Services (CMS) estimates that consumers who returned to
the marketplace to update their coverage during the Special Enrollment
Period saw a 40-percent reduction in net monthly premiums on average,
after accounting for the ARP's enhanced PTCs. The Congressional Budget
Office (CBO) estimates that if the enhanced PTCs were made permanent
and Congress closed the coverage gap in States that have not expanded
Medicaid, 3.9 million fewer people would be uninsured over the next
decade, compared to current law. This includes 1.4 million people
obtaining marketplace coverage who would otherwise be uninsured.
CBO also estimates that 1.6 million people with employer-based
coverage would move to marketplace coverage. One of the reasons for
that shift is that the Build Back Better legislation as marked up by
the House would allow for people to qualify for PTCs if their employee
share of job-based health insurance premiums exceeds 8.5 percent of
their income. Under current law, individuals who have offers of job-
based coverage are only eligible for PTCs if their employee share of
the job-based health insurance premium exceeds 9.83 percent of their
income.
Can you discuss the positive impact of allowing premium tax credit
eligibility for workers who bear very high cost burdens in employer-
sponsored coverage?
Answer. One remaining inequity in the current health insurance
system is that low-income workers with offers of health insurance
coverage through an employer or through the employer of a family member
may be prohibited from accessing subsidized marketplace nongroup health
insurance that may be of lower cost and higher actuarial value than the
employer-based insurance offered to them. A low-income worker with the
same income but who is not offered employer-based insurance may have
access to marketplace coverage at a household paid premium that
represents a substantially smaller share of their family income, and
they may well qualify for out-of-pocket subsidies that lower their
deductibles and co-payments/co-insurance to levels below typical
employer-based plans, depending upon their income. In addition, the
current ``firewall'' threshold of 9.83 percent of income (mentioned in
the question above) is even higher than the maximum percent of income
premium contribution of 8.5 percent included in the ARP and BBB
legislation; the 9.83 percent is consistent with the pre-ARP
marketplace subsidy schedule, which was less generous.
Consequently, lowering the employer-based insurance premium
``firewall'' percent of income threshold would make it consistent with
the new, more generous marketplace premium tax credit schedule, and
would allow more modest income workers and their family members the
choice to enroll in subsidized marketplace coverage that could lower
their insurance premiums and out-of-pocket costs. The value of this
change would accrue to lower-income working families, since these are
the people for whom employer-sponsored insurance premium contributions
are most likely to exceed 8.5 percent of family income.
For example, a family of four with income of 150 percent of the
Federal poverty level ($39,750) enrolling in subsidized marketplace
insurance coverage would pay 4.14 percent of their income or $1,646
($137 per month) for benchmark (second lowest premium) silver coverage
in 2022 under the ARP premium tax credit schedule and the schedule
provided under the reconciliation proposal. In addition, due to that
family's low income, by enrolling in silver level marketplace coverage,
they would receive a plan with an actuarial value of 94 percent (i.e.,
on average, 94 percent of covered medical costs would be reimbursed by
the insurer, 6 percent by the enrollee), significantly lowering the
out-of-pocket costs they would face when using medical care. In
contrast, the average full premium for employer-based family coverage
was $20,758 in 2020 (according to the Medical Expenditure Panel
Survey), and employer-based coverage generally has an actuarial value
in the neighborhood of 80 percent. Thus, a family at this income being
asked to contribute $3,890 ($324 per month, under 20 percent of the
total premium) for an employer-based family insurance policy is, under
current law, prohibited from obtaining subsidized marketplace coverage.
However, that family would have to pay 2.3 times as much (an additional
$2,244 per year) in order to enroll in the employer plan compared to a
subsidized marketplace plan if they were not barred by the 9.83 percent
of income ``firewall.'' In addition, without the marketplace's cost-
sharing reduction available to low-income families, an employer plan
would, in almost all circumstances, require the family to pay higher
deductibles, co-payments, and co-insurance when using medical care.
In sum, lowering the Affordable Care Act's employer-based insurance
``firewall'' to 8.5 percent would significantly lower both premium
contributions and out-of-pocket cost requirements for low-income
working families currently faced with very high financial burdens in
order to enroll in employer-based health insurance coverage. The lower
the percent of income threshold for the firewall is set, the larger the
number of families who could be provided a more affordable choice than
their employer may offer.
Question. The committee is examining approaches to help eliminate
barriers that health insurance companies have put in place that can
make it more difficult for people to obtain mental and behavioral
health services. As we consider our options, we also want to assess the
impact that short-term, limited-duration insurance plans have on access
to mental and behavioral health care. These plans are not required to
cover essential health benefits, including mental health services. One
analysis of short-term, limited duration insurance plans found that
only 57 percent of these plans covered mental health services and only
38 percent covered substance use disorder services. CBO estimates that
1.5 million Americans are enrolled in these plans.
Can you comment on the current scope of short-term, limited-
duration insurance plans in the market today and the risk they pose to
people who need coverage for mental health?
Answer. My Urban Institute colleagues estimate that 2.3 million
people below the age of 65 will be enrolled in short-term limited
duration (STLD) plans in 2022, absent additional policy changes.\1\
These plans are not subject to the requirements placed on nongroup
insurance plans qualified under the Affordable Care Act and sold
through the marketplaces and directly by many insurers. The STLD plans
pose considerable risks for all people who have, have had, or may have
health conditions in the future, and those with mental health needs are
no exception.
---------------------------------------------------------------------------
\1\ Jessica Banthin, Matthew Buettgens, Michael Simpson, Robin
Wang. ``What if the American Rescue Plan's Enhanced Marketplace
Subsidies were Made Permanent?'' The Urban Institute, April 2021,
https://www.urban.org/sites/default/files/publication/104072/what-if-
the-american-rescue-plans-enhanced-marketplace-subsidies-were-made-
permanent-estimates-for-2022_0_0.
pdf.
Outside of the 5 States that prohibit underwritten STLD plans,
these policies can deny coverage outright to applicants based on their
current, past, or expected health status. This means that people who
have experienced a mental health issue are unlikely to be able to
obtain coverage of any kind through one of these plans, and for those
who are offered coverage, the issuer is permitted to charge them very
high premiums compared to others without such conditions. Given the
enormous increase in people reporting depression and/or anxiety
disorders during the course of the COVID-19 pandemic, mental health
issues may be on course to be the most prevalent pre-existing condition
in the country. According to the National Health Interview Survey,
between 2019 and 2020, the share of adults reporting one of these
mental health conditions increased from 11 percent to 40 percent.\2\
This means that a substantially larger population could be excluded
from purchasing STLDs entirely or being ``up charged'' in order to
obtain it.
---------------------------------------------------------------------------
\2\ Cynthia Cox. ``Mental Illnesses May Soon be the Most Common
Pre-Existing Conditions.'' Kaiser Family Foundation, October 2020,
https://www.kff.org/policy-watch/mental-illness-may-soon-be-most-
common-pre-existing-conditions/.
Senator Wyden cited work by the Kaiser Family Foundation that found
that large percentages of STLD plans do not provide any coverage for
mental health care, given that these policies are not subject to
essential health benefit requirements under the ACA. In addition, we
know that large shares of the remainder that do provide some mental
health-care coverage place substantial limits on the number of visits,
prescriptions, or other types of mental health care that enrollees can
receive. Some offer no prescription drug coverage at all, for example.
In addition, most STLDs have annual and/or lifetime benefit limits,
furthering capping enrollees' benefits, regardless of the type of care
required. Thus, enrollees who have preexisting mental health needs or
develop them once enrolled are very unlikely to have coverage that
---------------------------------------------------------------------------
meets their needs, thus limiting their access to necessary care.
Further, because STLDs are not subject to the ACA's requirements to
provide clear standardized summaries of what is and is not covered and
any benefit limits imposed, many people buy STLDs without understanding
just how limited the covered benefits are. Consequently, consumers may
well miss a chance to enroll in comprehensive coverage during the
annual open enrollment period only to find out that they have no or
very limited coverage for their needs once they try to obtain
reimbursement under their STLD plan. As a result, a nonwealthy person
experiencing a mental health crisis while enrolled in one of these
plans may well be unable to obtain the treatment they need, leading to
unnecessarily bad outcomes.
Yet STLDs can have harmful implications even for people not
enrolled in them. Since STLD issuers can screen out people with
significant health needs while simultaneously limiting the claims paid
out on behalf of those they do enroll, they can generally be offered to
very healthy people at premiums below the unsubsidized premiums offered
in the ACA compliant nongroup markets. To the extent that more very
healthy people opt for STLDs instead of the comprehensive, higher value
compliant plans, the average health-care costs associated with the
enrollees in compliant plans will be higher than they otherwise would
be. Higher average health-care needs among ACA compliant plan enrollees
lead to higher premiums, pre-subsidy. This potential adverse selection
into ACA compliant coverage can make comprehensive insurance more
expensive for families, particularly those ineligible for financial
assistance (premium tax credits). The greater the enrollment in STLDs,
the greater the potential adverse effect on the comprehensive insurance
pools, and the greater the financial burden on those wanting and
needing that high value coverage.
______
Questions Submitted by Hon. Maria Cantwell
Question. The pandemic has brought about more advancement in
telemedicine in a couple short years than we have seen in decades. It
has been shown to work well for both patients and providers. UW
Medicine, in my home State of Washington, demonstrated that
telemedicine has provided a reliable modality for care for patients
without increasing overall health-care costs or utilization, as some
have feared.
Over the past 5 years, the number of people seeking telehealth
services at University of Washington Medicine has steadily grown to
around 21,000 per year in 2019. After the pandemic started, that number
ballooned to over 20,000 per month, accounting for approximately 20
percent of all ambulatory visits. I've also heard from many
constituents that they wish for expanded telehealth services to
continue even after the end of the public health emergency.
That being said, there are several issues that need to be addressed
first before we can provide quality telemedicine services to those who
are most in need.
Access to telehealth requires that patients have a reliable
broadband connection and access to monitoring equipment or devices.
However, many people in underserved communities do not have access to
either, making it difficult, if not impossible, for them to utilize
telehealth services. What specific steps can the Federal government
take to ensure equitable access to telehealth services?
As telehealth services become more popular across the country, more
and more providers are offering them to their patients. However, there
are population groups such as seniors that are sometimes not aware that
they have access to these services, or do no possess the technical
literacy to get the most out of telemedicine. How do we ensure that our
current telehealth infrastructure supports people who may require
additional assistance in accessing telehealth services? How can we
support our health-care providers to help them promote telehealth
literacy for their patients?
One persistent challenge with telemedicine, even with the
flexibilities afforded by the public health emergency, is the ability
for physicians to see patients across State lines. This can be
challenging when large metropolitan areas straddle State lines, such as
the city of Vancouver, Washington that borders Oregon. In these
instances, State licensing laws are acting as a barrier for patients to
seek telemedicine services with providers that they know and trust. Is
there anything Congress can do to help ensure broader coverage for
patients in these situations?
Answer. Unfortunately, the telemedicine topics in these questions
are outside my area of expertise; consequently, I do not feel
comfortable responding to them.
______
Question Submitted by Hon. Tim Scott
Question. We are seeing tremendous progress with therapeutic and
technological innovations that could soon cure diseases such as Sickle
Cell Disease.
As the science outpaces policy, how can reimbursement arrangements
and public programs evolve to ensure immediate patient access for one-
time curative treatments?
Answer. The technology for treatment of Sickle Cell Disease (SCD)
has clearly been advancing quickly in recent years. Yet, given the long
history of inadequate access to appropriate care for SCD patients,
improving quality and access to care for those afflicted with SCD will
require both changes to the way care is delivered to this population
and ensuring access to new treatments through insurance programs.
There is considerable evidence that large percentages of health-
care providers do not feel comfortable with their understanding of how
to treat patients with SCD. Given the complex nature of the condition
and the fact that most providers have little or no experience treating
the disease, it is inappropriate to expect primary care physicians to
be the central coordinator of care for these patients. Still, the
variety of physicians treating SCD include hematologists, oncologists,
pediatricians, and family medicine providers. Even among hematologists,
however, many see few SCD patients, and lack of background and
experience often leads to under prescribing of hydroxyurea. There is a
clear need for broader training of physicians of all disciplines in
cultural competency and acute and chronic pain management related to
SCD, as well as emerging treatments.
The development of a larger number of comprehensive sickle cell
centers, including those with a focus on adults, not just children, is
cited by many experts as an important next step in improving care for
patients with SCD. Development of these types of delivery systems can
be encouraged through payment incentives provided by Medicaid and
Medicare, the insurance systems covering the largest number of SCD
patients; it is estimated that Medicaid covers about 50 percent of the
SCD population and Medicare covers another 15 percent. These
comprehensive centers can be reimbursed not only for providing direct
patient care, but also for providing tele-mentoring to physicians
treating SCD patients in geographic areas beyond the centers' reach.
Incentivizing hospital emergency rooms to have a dedicated system
for people with SCD could also significantly improve care. Opioids are
known by specialists in the condition to be the best treatment for
acute SCD crises; however, many emergency department physicians are not
aware of this, leading to poor treatment and unnecessary patient
suffering.
In addition, the CMS Center for Consumer Information and Insurance
Oversight, the agency that oversees implementation of the Affordable
Care Act, could consider requiring that SCD therapies shown to be
effective be included in any Qualified Health Plan prescription drug
formulary. Doing so would ensure that enrollees with SCD in marketplace
plans would have insurance coverage for needed treatments. Since the
number of enrollees with SCD in any particular marketplace plan can be
expected to be small, the additional costs of such a requirement could
be spread broadly across all enrollees, likely adding a small amount to
the pre-subsidy premium. In addition, the risk adjustment system in the
ACA compliant nongroup insurance markets leads to sharing of the
treatment costs for high need patients across all plans offering
coverage in those markets, regardless of how many of those patients are
enrolled in a particular plan. Note, however, that such an approach
would mean SCD treatments were covered more broadly than is the case
for treatments for other serious conditions.
______
Question Submitted by Hon. James Lankford
Question. The Affordable Care Act allows taxpayer funding for
abortion on demand, but at the very least it acknowledged the right of
States to prohibit abortion coverage on the exchanges and that abortion
could not be required as an essential health benefit. Eleven of the 12
States that have chosen not expand Medicaid have also chosen to
prohibit abortion coverage on the exchanges. As written, the Democrats'
reconciliation proposal would override these State laws and mandate
coverage of, and funding for, abortions on demand, and transportation
services to acquire them, for those under 138 percent of poverty and
without cost sharing in 2024. However, the bill refers to abortions in
an underhanded way.
Do you agree that abortion coverage is mandated and funded by the
proposed reconciliation bill's reference to family planning services
``which are not otherwise provided under such plan as part of the
essential health benefits package'' (subsection (c) of section 137505)?
Answer. No, I do not agree. Based upon the most recent language I
can identify, the reconciliation proposal States: ``services described
in subsection (a)(4)(C) of section 1905 of the such Act for which
Federal payments would have been so available: which are not otherwise
provided under such plan a part of the essential health benefits
package as described in section 1302(a).''
Section (a)(4)(C) of section 1905 states--(C) family planning
services and supplies furnished (directly or under arrangements with
others) to individuals of child-
bearing age (including minors who can be considered to be sexually
active) who are eligible under the State plan and who desire such
services and supplies;
Given that only services where ``Federal payments would have been
so available'' (in Medicaid)--abortion (outside of Hyde circumstances)
is not one of the services included.
Prepared Statement of Sara R. Collins, Ph.D.,* Vice President,
Health Care Coverage and Access, The Commonwealth Fund
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* The views presented here are those of the author and not
necessarily those of The Commonwealth Fund or its directors, officers,
or staff. To learn more about new publications when they become
available, visit the Fund's website and register to receive email
alerts.
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the current status of employer health insurance coverage
in the united states
Thank you, Mr. Chairman, members of the committee, for this
invitation to testify today on the current status of employer health
insurance coverage in the United States. My comments will focus on
trends in enrollment, the share of employers offering health insurance
to workers, the costs of insurance and health care for people who are
enrolled in the plans, and policy options to improve workers' coverage.
employer health insurance is the backbone of the
u.s. health insurance system
Employer health insurance continues to be the primary source of
insurance coverage for the majority of the U.S. population. More than
half the population under age 65--about 163 million people--get their
health insurance through an employer, either their own or a family
member's (Exhibit 1).\1\
---------------------------------------------------------------------------
\1\ Analysis of the 2021 Current Population Survey by Sherry Glied
and Mikaela Springsteen of New York University for the Commonwealth
Fund.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Enrollment in employer health plans has changed little over the
last decade even as the Federal Government expanded coverage options
through the Affordable Care Act (ACA). Nearly all companies with 200 or
more workers offer insurance to their employees (Exhibit 2).\2\ Small
firms, however, are less likely to offer coverage and there has been
some decline in the share that offers over the last decade. Employers
in some sectors of the economy, including food services and retail. are
far less likely to offer coverage than some others, such as
manufacturing, finance, and insurance (Exhibit 3).\3\
---------------------------------------------------------------------------
\2\ Kaiser Family Foundation, Employer Health Benefits, 2020 Annual
Survey.
\3\ Paul Fronstin and Stephen A. Woodbury, How Many Americans Have
Lost Jobs with Employer Health Coverage During the Pandemic?
(Commonwealth Fund, October 2020), https://doi.org/10.26099/q9p1-tz63.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Employer coverage proved to be resilient during the pandemic.
Despite the deepest recession since the 2008 economic downturn, a
recent Commonwealth Fund survey found that only 6 percent of working-
age adults reported they lost employer coverage during the pandemic
(Exhibit 4).\4\ Other research estimates about 3 million to 7 million
people lost employer coverage.\5\ This loss is limited compared to the
large number of jobs lost in 2020 partly because industries hit hardest
with
pandemic-related job losses, such as hotel, food service, and retail,
had among the lowest employer coverage rates before the pandemic. Other
laid-off workers were more fortunate: about 42 percent of companies
that dismissed workers during the pandemic continued to pay at least
part of their insurance premiums.\6\
---------------------------------------------------------------------------
\4\ Sara R. Collins, Gabriella N. Aboulafia, and Munira Z. Gunja,
As the Pandemic Eases, What Is the State of Health Care Coverage and
Affordability in the U.S.? Findings from the Commonwealth Fund Health
Care Coverage and COVID-19 Survey, March-June 2021 (Commonwealth Fund,
July 2021), https://doi.org/10.26099/6w2d-7161.
\5\ Paul Fronstin and Stephen A. Woodbury, ``Update: How Many
Americans Have Lost Jobs with Employer Health Coverage During the
Pandemic?'' To the Point (blog), Commonwealth Fund, January 11, 2021,
https://doi.org/10.26099/pg4k-k397.
\6\ Paul Fronstin and Stephen A. Woodbury, ``Update: How Many
Americans Have Lost Jobs with Employer Health Coverage During the
Pandemic?'' To the Point (blog), Commonwealth Fund, January 11, 2021,
https://doi.org/10.26099/pg4k-k397.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Unlike during prior recessions, the ACA's coverage expansions
provided a safety-net for people who lost employer coverage. This
safety-net was enhanced by Federal relief efforts to help people
maintain their Medicaid coverage, a substantial increase in marketplace
premium subsidies under the American Rescue Plan Act (ARPA), and
extended special-enrollment periods in State-run marketplaces in 2020
and in the Federal marketplaces in 2021. Among workers who did lose
employer coverage, 20 percent gained insurance through another
employer, 20 percent elected COBRA, 16 percent gained coverage through
Medicaid and 9 percent got covered through the marketplaces or
individual market. Nearly 3 in 10--29 percent--became uninsured,
reflecting ongoing holes in our coverage system and lack of awareness
of options. But the availability of affordable coverage options kept
gaps in coverage relatively short for a majority of people who lost
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employer coverage (Exhibit 5).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
the u.s. has a health care spending problem in commercial insurance
plans; consumers are paying the price
The ACA's coverage expansions, market rules against underwriting,
and mandates for employers to offer coverage have enabled millions of
previously people to get covered with comprehensive affordable
coverage.\7\ Research has shown that these provisions have led to an
overall downward trend in out-of-pocket costs across the U.S.
population.\8\
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\7\ Sherry A. Glied, Sara R. Collins, and Saunders Lin, ``Did the
Affordable Care Act Lower Americans' Financial Barriers to Health
Care?'', Health Affairs 39, no. 3 (March 2020): 379-86, https://
doi.org/10.26099/79hw-ax66.
\8\ Sherry A. Glied and Benjamin Zhu, Catastrophic Out-of-Pocket
Health Care Costs: A Problem Mainly for Middle-Income Americans with
Employer Coverage (Commonwealth Fund, April 2020), https://doi.org/
10.26099/x0cx-cp48.
But the United States has a health-care spending problem in
commercial insurance. This is demonstrated by the amount that the 180
million people with employer and individual market plans pay for their
insurance and health care. New research from the Health Care Cost
Institute show that among people with employer insurance, spending per
person grew by 21.8 percent between 2015 and 2019, outpacing both
inflation and GDP growth (Exhibit 6).\9\ The data also show that
average prices paid for health-care services and prescription drugs
were the primary drivers, accounting for nearly two-thirds of overall
growth.
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\9\ Health Care Cost Institute, 2019 Health Care Cost and
Utilization Report, October 2021.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
These high prices are associated with higher employer premiums
(Exhibit 7).\10\ Because employers share these costs with their workers
in the form of premium contributions and deductibles, workers' costs
are also rising. In most States, they are rising faster than median
income.
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\10\ David C. Radley, Sara R. Collins, Jesse C. Baumgartner, 2020
Scorecard on State Health System Performance, September 11, 2020,
https://www.commonwealthfund.org/publications/scorecard/2020/sep/2020-
scorecard-state-health-system-performance.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
New data on employer plans released by the Federal Government
this fall and analyzed by the Commonwealth Fund, show that worker
premium contributions and deductibles in employer plans have taken up a
growing share of worker's incomes over the past decade. These costs
accounted for 11.6 percent of median household income in 2020, up from
9.1 percent a decade earlier (Exhibit 8).\11\
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\11\ Sara R. Collins, David C. Radley, and Jesse C. Baumgartner,
State Trends in Employer Premiums and Deductibles, 2010-2020
(Forthcoming Commonwealth Fund, December. 2021).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
There is wide variation in what workers pay for employer
coverage relative to their incomes across the country. Premium
contributions and deductibles were 10 percent or more of median income
in 37 States in 2020, up from 10 States in 2010 (Exhibit 9). In nine
States (Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico,
Oklahoma, South Carolina, and Texas) the average combined costs of
premium contributions and deductibles amounted to 14 percent or more of
median income in 2020. Middle-income workers in Mississippi and New
Mexico faced the highest potential costs relative to income (19.0
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percent and 18.1 percent, respectively).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
These costs add to already considerable burdens for families.
For example, housing and food consumed 34 percent of average family
income in 2020.\12\ Among families with children under age 5 who pay
for child care, average spending on child care took up 13 percent of
family income in 2017.\13\
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\12\ Bureau of Labor Statistics, ``Consumer Expenditures--2020,''
news release, September 9, 2021, https://www.bls.gov/news.release/pdf/
cesan.pdf.
\13\ U.S. Department of the Treasury, The Economics of Child Care
Supply in the United States, September 2021, https://home.treasury.gov/
system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf.
Workers across the income spectrum have experienced steady growth
in their insurance costs. But people living in States with lower median
incomes are doubly burdened. On average, workers in States with median
incomes lower than the national median face higher absolute costs
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compared to people in States with higher median incomes (Exhibit 10).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Kaiser Family Foundation's annual survey of employer
benefits finds that in lower wage firms, insured workers contribute a
larger share of the premium for family plans than those in higher wage
firms (Exhibit 11).\14\ Non-unionized workforces contribute a larger
share of the premium than do unionized workforces.
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\14\ Kaiser Family Foundation, Employer Health Benefits, 2020
Annual Survey.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Workers with the largest premium contributions relative to
median income were concentrated in southern States. In Alabama,
Arkansas, Delaware, Florida, Georgia, Louisiana, Mississippi, Nevada,
New Mexico, Oklahoma, North Carolina, South Carolina, and Texas,
premium contributions were 8 percent or more of median income, with a
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high of 12.7 percent in Mississippi (Exhibit 12).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
deductible growth is leaving millions underinsured
The Commonwealth Fund has found that insured people who have high
out-of-pocket costs and deductibles relative to their income are more
likely to face problems accessing care and paying medical bills than
those who do not. We have defined someone who has been continuously
insured over the last year as ``underinsured'' if their plan's
deductible equals 5 percent or more of income or if their out-of-pocket
costs over the past year are equal to 10 percent or more of income (5
percent or more if low income).\15\
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\15\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
U.S. Health Insurance Coverage in 2020: A Looming Crisis in
Affordability--Findings from the Commonwealth Fund Biennial Health
Insurance Survey, 2020 (Commonwealth Fund, August 2020), https://www.
commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-
health-coverage-2020-biennial.
In 2020, about one-quarter of people in employer plans were
underinsured by this measure (Exhibit 13). While rates were higher in
the individual market, the largest growth has occurred in employer
plans. This growth has been driven by growth in the size of deductibles
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relative to family income (Exhibit 14).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Across the country, average deductibles in employer plans
relative to median income were 5 percent or more in 22 States (Arizona,
Arkansas, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana,
Mississippi, Missouri, Montana, New Mexico, Nevada, North Carolina,
Oklahoma, South Carolina, South Dakota, Tennessee, Texas, West
Virginia, Wisconsin, Wyoming) and ranged as high as 7.4 percent in New
Mexico (Exhibit 15).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
One reason for the growth in average deductibles is more
workers are enrolled in high-deductible plans with savings accounts
either health reimbursement arrangements (HRAs) or health savings
accounts (HSAs). About three of 10 workers are enrolled in such plans
(Exhibit 16).\16\ About half of workers with HRAs and a quarter of
those with HSAs receive employer contributions that reduce their
deductibles to between zero and $1,000. Still, accounting for these
contributions only reduces the share of workers across all single-
coverage plans with deductibles of $1,000 or more from 57 percent to 47
percent (Exhibit 17).
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\16\ Kaiser Family Foundation, Employer Health Benefits, 2020
Annual Survey.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
high cost exposure in commercial plans distorts consumers' health
care decisions and leads to financial problems
Research indicates that people who face high deductibles often
avoid getting needed health care. A 2020 Commonwealth Fund survey found
that among people in commercial plans, more than one-third of those
with a deductible of $1,000 or more said they had not gotten needed
health care due to cost, including not filling a prescription, not
going to the doctor when sick, not getting a follow up test or
treatment recommended by a doctor, or not seeing a specialist (Exhibit
18).\17\
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\17\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
U.S. Health Insurance Coverage in 2020: A Looming Crisis in
Affordability--Findings from the Commonwealth Fund Biennial Health
Insurance Survey, 2020 (Commonwealth Fund, August 2020), https://www.
commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-
health-coverage-2020-biennial.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
When people in high-deductible plans do get care, they are
susceptible to racking up medical debt. Forty-one percent of adults
with a deductible of $1,000 or more reported they had experienced
problems paying medical bills, including not being able to pay a bill,
being contacted by a collection agency about an unpaid bill, having to
change their way of life to pay their bills, or paying off debt over
time. Among those who were paying off medical debt, 63 percent said
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they were paying off bills worth $2,000 or more.
Medical bill problems and debt have become endemic in our health
system. The media is awash in stories of patients receiving outlandish,
uncovered bills.\18\ A recent JAMA article found that 17.8 percent of
people in the U.S. had medical debt in collections, with the highest
shares in the South and in predominantly poor zip codes.\19\ Between
2009 and 2020, the amount of medical debt in collections overtook that
of nonmedical debt.
---------------------------------------------------------------------------
\18\ See for example Kaiser Health News and National Public Radio's
ongoing ``Bill of the Month'' series, https://khn.org/news/tag/bill-of-
the-month/.
\19\ Raymond Kluender, et al., ``Medical Debt in the US, 2009-
2020,'' JAMA. 2021;326(3):250-256. doi:10.1001/jama.2021.8694.
Medical debt has spillover financial implications. In a 2021
Commonwealth Fund survey, one-third of adults in employer-based plans
reported problems paying their bills or that they were paying off debt
over time (Exhibit 19).\20\ Of those who reported these difficulties,
40 percent said that they had received a lower credit score because of
their medical bills; 40 percent had taken on credit card debt to pay
their bills; 35 percent had used up most or all their savings to pay
their bills; 23 percent had been unable to pay for basic life
necessities like food, heat, or rent; and 21 percent had delayed
education or career plans (Exhibit 20).
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\20\ Sara R. Collins, Gabriella N. Aboulafia, and Munira Z. Gunja,
As the Pandemic Eases, What Is the State of Health Care Coverage and
Affordability in the U.S.? Findings from the Commonwealth Fund Health
Care Coverage and COVID-19 Survey, March-June 2021 (Commonwealth Fund,
July 2021), https://doi.org/10.26099/6w2d-7161.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
policy options
The ACA's subsidized marketplaces and Medicaid expansion have
provided a safety net for people in unaffordable or skimpy employer
health plans. Improving the affordability and cost protection of
marketplace plans and expanding Medicaid in all States, increasing
awareness of these coverage options among workers, and making it easier
for eligible workers to enroll in them will relieve some of the
problems highlighted in this testimony. Specific improvements include:
Make the temporary ARPA marketplace subsidies permanent.
Provide a zero-premium, zero-cost sharing insurance option for
Medicaid-
eligible adults in the coverage gap in the 12 States that have not yet
expanded their programs.
Inform workers with employer coverage of their options to
enroll in subsidized marketplace plans and Medicaid and, if they lose
employer coverage, that they are eligible for a marketplace special-
enrollment period.
Fix the ``family coverage glitch.'' Under the ACA, families
are ineligible for marketplace premiums if a family member has an offer
of single-employer coverage that is affordable, (i.e., premiums less
than 9.83 percent of family income).\21\ About 5 million people are
caught in this glitch: they are in family plans with premium
contributions that exceed that threshold, but are ineligible for
marketplace subsidies.\22\ The Biden administration could fix this
administratively, saving families that switched to marketplace plans an
average of $400 person; families with incomes under 200 percent of the
Federal poverty level could save $580 per person.
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\21\ Timothy S. Jost, ``Eliminating the Family Glitch,'' To the
Point (blog), Commonwealth Fund, May 18, 2021, https://doi.org/
10.26099/gh5r-vm20.
\22\ Matthew Buettgens and Jessica Banthin, Changing the ``Family
Glitch'' Would Make Health Coverage More Affordable for Many Families
(Urban Institute, May 2021), https://www.
urban.org/sites/default/files/publication/104223/changing-the-family-
glitch-would-make-health-coverage-more-affordable-for-many-
families_1.pdf.
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Lower the ``employer firewall'' threshold from 9.83 to 8.5
percent of income (i.e., the ARPA premium contribution cap). When
combined with the fix to the family coverage glitch, this change would
mean that no one would have to spend more than 8.5 percent of income
for their health insurance. Commonwealth Fund analyses indicate one-
quarter of people with low incomes in employer plans who are not
eligible for Medicaid in their States spend more than 8.5 percent of
their household income on premiums (Exhibit 21).
Rein in deductibles and out-of-pocket costs in marketplace
plans. One proposal could eliminate deductibles for some people and
reduce it for others by as much as $1,650.\23\
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\23\ Improving Health Insurance Affordability Act of 2021, S. 499,
https://www.congress.gov/117/bills/s499/BILLS-117s499is.pdf; Linda J.
Blumberg, et al., From Incremental to Comprehensive Health Insurance
Reform: How Various Reform Options Compare on Coverage and Costs (Urban
Institute, October 2019), https://www.urban.org/sites/default/files/
2019/10/15/from_incremental_to_comprehensive_health_insurance_reform-
how_various_reform_options_
compare_on_coverage_and_costs.pdf.
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The historic No Surprises Act passed by Congress in 2020 and
set to go into effect in January 2022 will protect most consumers from
surprise medical bills from out-of-network providers and some emergency
transportation providers.\24\ Other measures to protect consumers from
the devastating consequences of medical debt include expanding the
reach of the ACA's financial assistance policies for nonprofit
hospitals to cover all hospitals and a broader range of providers,
imposing stronger consumer protection rules for medical debt collection
such as grace periods following illness or during appeals processes,
and placing bans or limits on medical debt interest rates.\25\
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\24\ Jack Hoadley and Kevin Lucia, ``Putting Surprise Billing
Protections into Practice: Biden Administration Releases First Set of
Regulations,'' https://www.commonwealthfund.org/blog/2021/putting-
surprise-billing-protections-practice-biden-administration-releases-
first-set, To the Point (blog), Commonwealth Fund, July 14, 2021.
\25\ National Consumer Law Center, Model Medical Debt Protection
Act, September 2019, https://www.nclc.org/images/pdf/medical-debt/
model-medical-debt-protection-act-082017.pdf.
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Address the high commercial provider prices that are the
primary driver of employer premiums and deductibles. This could be
pursued by adding a public plan option to the marketplaces, among other
approaches.\26\
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\26\ Linda J. Blumberg et al., Comparing Health Insurance Reform
Options; John Holahan, Michael Simpson, and Linda J. Blumberg, What Are
the Effects of Alternative Public Option Proposals (Urban Institute,
March 2021), https://www.urban.org/research/publication/what-are-
effects-alternative-public-option-proposals; Robert A. Berenson, et
al., Addressing Health Care Market Consolidation and High Prices, The
Urban Institute, January 2020, https://www.urban.org/sites/default/
files/publication/101508/addressing_health_care_market_
consolidation_and_high_prices_1.pdf; Sherry A. Glied and Jeanne M.
Lambrew, How Democratic Candidates for the Presidency in 2020 Could
Choose Among Public Health Insurance Plans (Health Affairs, November
2018).
---------------------------------------------------------------------------
Develop an auto-enrollment mechanism to help people enroll and
stay enrolled in comprehensive coverage. Creating a public plan as a
default option would be essential to a national auto-enrollment
program.\27\
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\27\ Linda J. Blumberg, John Holahan, and Jason Levitis, How Auto-
Enrollment Can Achieve Near-Universal Coverage: Policy and
Implementation Issues (Commonwealth Fund, June 2021), https://
www.commonwealthfund.org/publications/issue-briefs/2021/jun/how-auto-
enrollment-can-achieve-near-universal-coverage.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The cost burden in commercial insurance is an enduring problem
in U.S. health care that is undermining America's overall economic
well-being. This year's U.S. Supreme Court decision reaffirming the
constitutionality of the ACA paves the way for Congress to use the
tools provided by the law to cover the remaining uninsured and make
health care affordable to people covered by both public and commercial
insurance. Doing so will help facilitate the country's postpandemic
---------------------------------------------------------------------------
recovery and its future prosperity.
Thank you.
______
Questions Submitted for the Record to Sara R. Collins, Ph.D.
Questions Submitted by Hon. Ron Wyden
Question. The enhanced premium tax credits (PTCs) from the American
Rescue Plan (ARP) are already providing vital assistance to American
families to help them afford health insurance coverage on the
Affordable Care Act's (ACA's) Health Insurance Marketplaces. During the
Special Enrollment period for Marketplace coverage this year, 2.8
million new customers signed up for coverage. The Centers for Medicare
and Medicaid Services (CMS) estimates that consumers who returned to
the marketplace to update their coverage during the Special Enrollment
Period saw a 40-percent reduction in net monthly premiums on average,
after accounting for the ARP's enhanced PTCs. The Congressional Budget
Office (CBO) estimates that if the enhanced PTCs were made permanent
and Congress closed the coverage gap in States that have not expanded
Medicaid, 3.9 million fewer people would be uninsured over the next
decade, compared to current law. This includes 1.4 million people
obtaining marketplace coverage who would otherwise be uninsured.
CBO also estimates that 1.6 million people with employer-based
coverage would move to marketplace coverage. One of the reasons for
that shift is that the Build Back Better legislation as marked up by
the House would allow for people to qualify for PTCs if their employee
share of job-based health insurance premiums exceeds 8.5 percent of
their income. Under current law, individuals who have offers of job-
based coverage are only eligible for PTCs if their employee share of
the job-based health insurance premium exceeds 9.83 percent of their
income.
Can you discuss the positive impact of allowing premium tax credit
eligibility for workers who bear very high cost burdens in employer-
sponsored coverage?
Answer. The employer affordability threshold has always been an
important part of the ACA for middle- and lower-income workers, and
lowering the threshold to 8.5 percent of income will mean that in
theory no one in the U.S. will have to contribute more than 8.5 percent
of their income towards premiums. A new analysis from the Commonwealth
Fund of the Medical Expenditure Panel Survey shows that over the past
decade, worker premium contributions and deductibles for employer plans
have consumed a growing share of workers's incomes. In 2020, average
employee premium contributions alone comprised more than 8.5 percent of
median income in 8 States (Mississippi, New Mexico, Florida, Louisiana,
Nevada, South Carolina, Oklahoma, Texas); a decade earlier in 2010, in
only one State, Mississippi, were middle-class people spending that
much of their income on employer premiums.\1\
---------------------------------------------------------------------------
\1\ Sara R. Collins, David C. Radley, and Jesse C. Baumgartner,
State Trends in Employer Premiums and Deductibles, 2010-2020
(Forthcoming Commonwealth Fund, December. 2021).
As noted in my testimony, Commonwealth Fund research has shown that
one-quarter of people with incomes between 0-199 percent of poverty who
are in employer plans and not eligible for Medicaid spend more than 8.5
percent of their household income on after-tax premiums.\2\
---------------------------------------------------------------------------
\2\ Jesse C. Baumgartner, Sara R. Collins, and David C. Radley,
Removing the Firewall Between Employer Insurance and the ACA
Marketplaces: Who Could Benefit? (Commonwealth Fund, December 2020),
https://doi.org/10.26099/hg7v-dy10.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Question. Improving access to behavioral health services is a
longstanding issue that has become even more important during the
COVID-19 pandemic. The pandemic has highlighted and worsened the
weaknesses and gaps in the country's mental health-care system, as the
committee heard at our hearing on this topic in the summer. This is a
bipartisan issue, as Ranking Member Crapo and I are working together to
develop legislation to address the mental and behavioral health needs
of Americans across the country. Among other policies, we are
interested in policies that will ensure that health insurance companies
are not erecting unnecessary barriers to mental and behavioral health
---------------------------------------------------------------------------
care.
What do you think are the top two policies that this committee
should consider to address mental health parity and reduce insurance
barriers to mental health care?
Answer. The Affordable Care Act made historic strides in addressing
the mental health and behavioral health needs of Americans through
expanded eligibility for Medicaid, individual and small group market
reforms that ban pre-existing condition exclusions and require coverage
of mental health and substance abuse services as essential health
benefits, and marketplace premium and cost- sharing subsidies. The law
also applied previously passed mental health parity requirements to
these plans. The literature shows that these expansions and reforms
increased coverage among people with mental health needs and improved
access to mental health services and reduced unmet need.\3\ One study
\4\ found that living in a Medicaid expansion State was associated with
a greater decline in cost-related access problems for low-income adults
with depression. Multiple studies found \5\ that living in a Medicaid
expansion State was associated with relative reductions in poor mental
health days for low-income adults.
---------------------------------------------------------------------------
\3\ Jesse C. Baumgartner, Gabriella N. Aboulafia, and Audrey
McIntosh, ``The ACA at 10: How Has It Impacted Mental Health Care?'',
To the Point (blog), Commonwealth Fund, April 3, 2020, https://doi.org/
10.26099/2ajx-qg59.
\4\ https://ps.psychiatryonline.org/doi/full/10.1176/
appi.ps.201800181?url_ver=Z39.88-2003&r
fr_id=ori:rid:crossref.org&rfr_dat=cr_pub%3dpubmed.
\5\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6109019/.
For employer plans, the Mental Health Parity Act of 1996 and the
Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) \6\
required all large-group employer insurance plans to cover mental
health services at the same level as medical and surgical services, if
they offered them. This is known as ``parity,'' and means that there
cannot be greater cost-sharing or other limitations for mental health
services. But they are not required to offer mental health benefits,
though most do.
---------------------------------------------------------------------------
\6\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-
Insurance-Protections/mhpaea_factsheet.
Top policy options to improve coverage and access for people with
mental health needs include: filling the Medicaid coverage gap in the
remaining 12 non expansion States with zero premium and zero cost-
sharing health coverage; extending mandatory essential health benefits
to the large-group employer market; eliminating non-ACA-compliant plans
that tend not to cover mental health benefits; and reining in
deductibles and cost-sharing that leave millions of people in
commercial health insurance plans underinsured.\7\
---------------------------------------------------------------------------
\7\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
U.S. Health Insurance Coverage in 2020: A Looming Crisis in
Affordability--Findings from the Commonwealth Fund Biennial Health
Insurance Survey, 2020 (Commonwealth Fund, August 2020).
Question. Efforts to expand health insurance coverage to those who
are uninsured is of paramount importance, but the committee must also
focus on ensuring that the coverage that people do have does not expose
them to sky-high out-of-pocket costs. To address growing deductibles
and health insurance premiums faced by consumers in employer-based
coverage and Marketplace coverage, we need to examine the underlying
causes, including in particular the high prices that we pay for health-
---------------------------------------------------------------------------
care services and medications.
What factors are most responsible for rising premiums and
deductibles in job-based coverage? And what can we do to address them?
Answer. The United States has a health-care spending problem in the
commercial insurance markets. This is demonstrated by the amount that
the 180 million people with employer and individual market plans pay
for their insurance and health care. New research from the Health Care
Cost Institute show that among people with employer insurance, spending
per person grew by 21.8 percent between 2015 and 2019, outpacing both
inflation and GDP growth.\8\ The data also show that average prices
paid for health-care services and prescription drugs were the primary
drivers, accounting for nearly two-thirds of overall growth. This is
true across all service types--inpatient, outpatient, physician, and
prescription drugs. We know this because commercial utilization across
services has largely been flat or minimal (with inpatient visits
decreasing) and prices increasing quite significantly year over year.
---------------------------------------------------------------------------
\8\ Health Care Cost Institute, 2019 Health Care Cost and
Utilization Report, October 2021.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
In surveys of employers, the two top drivers of spending \9\
reported are (1) hospital spending and (2) drug spending. Hospitals
make up the largest portion of spending so they are a particular
concern. Drugs represent a smaller but growing portion of spending and
their growth rate is a concern given the pipeline of products and their
expected costs.
---------------------------------------------------------------------------
\9\ https://sehpcostcontainment.chir.georgetown.edu/documents/SEHP-
report-final.pdf.
These prices are driving premiums in employer plans higher,
employers share those costs with employees in the form of higher
premium contributions, deductibles, and through wage concessions. This
means that when people in these plans do need care they either avoid it
or incur bills they cannot pay, ending up being pursued by hospitals
who charged the high prices in the first place. These prices also
increase the premium costs of marketplace coverage and thus federally
---------------------------------------------------------------------------
financed subsidies.
To address this problem, policies at the Federal level include:
Adding a public plan option to the marketplaces or otherwise
capping provider prices paid by health plans.\10\
---------------------------------------------------------------------------
\10\ Linda J. Blumberg et al., Comparing Health Insurance Reform
Options; John Holahan, Michael Simpson, and Linda J. Blumberg, What Are
the Effects of Alternative Public Option Proposals (Urban Institute,
March 2021), https://www.urban.org/research/publication/what-are-
effects-alternative-public-option-proposals; Sherry A. Glied and Jeanne
M. Lambrew, ``How Democratic Candidates for the Presidency in 2020
Could Choose Among Public Health Insurance Plans'' (Health Affairs,
November 2018).
---------------------------------------------------------------------------
Policies aimed at reducing drug prices.\11\
---------------------------------------------------------------------------
\11\ David Blumenthal, Mark E. Miller, and Lovisa Gustafsson, ``The
U.S. Can Lower Drug Prices Without Sacrificing Innovation,'' Harvard
Business Review, October 1, 2021.
There is also considerable activity in States that can inform
Federal policy:\12\
---------------------------------------------------------------------------
\12\ Robert A. Berenson, et al., Addressing Health Care Market
Consolidation and High Prices, The Urban Institute, January 2020,
https://www.urban.org/sites/default/files/publication/101508/
addressing_health_care_market_consolidation_and_high_prices_1.pdf.
Price transparency. Many States have now created all payer
claims databases that can inform policy makers of the drivers of
health-care spending.
Increasing competition in consolidated markets. Many States
are taking steps to increase competition in hospital markets such as
experimenting with public plan options to enhance competition in
consolidated markets (Washington and Colorado), challenging
anticompetitive behaviors, and identifying vertical and cross market
mergers.
States are using existing regulatory structures to limit
provider prices.
Montana and Oregon implemented price ceilings
on hospital payment rates within their State employee health benefit
plans. Such ceilings could be models for State price ceilings on
provider payments in the commercial market.
Certificate of need laws.
Rhode Island empowers its insurance
commissioner to review proposed premium rates, and review and approve
hospital payment rate increases included in insurance contracts.
Maryland modified its rate-setting approach
used to control hospital spending to setting all payer hospital
budgets.
______
Questions Submitted by Hon. Tim Scott
Question. We heard a great deal of testimony about our health-care
system in general, the need to improve patient outcomes, access to care
in certain communities and how to better address health equity. Last
month, the Centers for Disease Control and Prevention (CDC) released
State-by-State obesity rates. Specifically, the CDC called for ``action
at the policy and systems level to ensure that obesity prevention and
management starts early, and that everyone has access to good
nutrition, safe places to be physically active, and quality obesity
clinical care.''
Given the correlation between family income and physical activity,
has the Commonwealth Fund examined the issue of wellness access?
For example, there is growing concern around a lack of physical
activity in certain communities which are often attributed to unsafe
streets, limited access to playgrounds and pay-to-play policies inside
and outside school. Has the Commonwealth Fund studied these factors and
their impact on underlying issues contributing to obesity,
cardiovascular and behavioral health disorders?
Could modernizing the tax code to ensure physical fitness is
treated as a form of preventative health care be helpful in this
pursuit?
Answer. The Commonwealth Fund's Scorecard on State Health System
Performance ranks State health system performance on the basis of 49
different health indicators.\13\ Adult and childhood obesity are
included in our ``Healthy Lives'' performance dimension. South Carolina
has one of the highest childhood obesity rates (38 percent) in the
country ranking it at 48th in performance on this measure. A similar
share of adults are obese (35 percent), ranking the State at 34th in
performance. This contributes to South Carolina's overall low health
system performance ranking--37th in our 2020 Scorecard.
---------------------------------------------------------------------------
\13\ David C. Radley, Sara R. Collins, Jesse C. Baumgartner, 2020
Scorecard on State Health System Performance, Commonwealth Fund,
September 2020, https://www.commonwealth
fund.org/publications/scorecard/2020/sep/2020-scorecard-state-health-
system-performance.
We have not investigated the drivers of obesity that you highlight
in our work, all of which are certainly contributing factors. But at a
minimum, having good health insurance, in particular, ACA compliant
coverage, will enable people access to free preventive care and regular
interaction with the health system that is a first step towards
---------------------------------------------------------------------------
reducing obesity and its associated health problems.
Under the ACA, free preventive health services include obesity
related care including obesity screening and counseling and diet
counseling, in addition to screening for associated health problems
(e.g., cholesterol and blood pressure screening). Guidelines and
counseling for physical activity could be made more explicit, per your
recommendation.
The ACA also created new incentives and builds on existing wellness
program policies to promote employer wellness programs and encourage
opportunities to support healthier workplaces. These include programs
that reimburse for the cost of a fitness center membership and those
that have health incentives included, with guidelines to prevent
discrimination by health status. While these programs are very popular,
with an estimated 63 million people in employer health plans that offer
them in 2020, the evidence that they promote health is mixed.\14\
Healthier and wealthier employees have been found to be more likely to
participate than those in poorer health and less income.
---------------------------------------------------------------------------
\14\ Katie Keith, ``EEOC Will Advance New Wellness Regulations,''
Health Affairs Blog, June 17, 2020.DOI: 10.1377/hblog20200617.824130.
Expanding Medicaid coverage in all States and getting people
covered in the insurance they are eligible for is a necessary first
step in addressing rising obesity, but clearly more work is needed to
---------------------------------------------------------------------------
address the underlying drivers that you highlight.
Question. With the ongoing opioid epidemic, are overdose reversal
drugs being required to be co-prescribed to Federal beneficiaries for
all Federal health-care programs, and is naloxone covered as a
formulary?
If a Federal beneficiary wants to use the State standing order,
will the Federal health-care plan pay as an in plan drug not an out-of-
pocket expense?
Answer. Medicaid coverage, and in particular, its coverage of
naloxone, has been a critical part of the Nation's fight to control the
opioid epidemic.\15\ States that have expanded Medicaid eligibility
under the ACA have had an advantage over those States that have not
expanded their programs.\16\ But some States have more restrictive
access to prescription drugs in their Medicaid programs including more
restrictive fill limits, that reduce access to naloxone.\17\ Exempting
naloxone from such fill limits would further aid States' ability to
prevent opioid overdose mortality. Medicaid and Medicare beneficiaries
can also face out-of-pocket costs for naloxone prescriptions, which
States and the Federal Government could address.\18\
---------------------------------------------------------------------------
\15\ Jesse C. Baumgartner and David C. Radley, ``The Drug Overdose
Mortality Toll in 2020 and Near-Term Actions for Addressing It,'' To
the Point (blog), July 15, 2021, updated August 16, 2021, https://
doi.org/10.26099/gb4y-r129.
\16\ Richard G. Frank and Carrie E. Fry, ``The Impact of Expanded
Medicaid Eligibility on Access to Naloxone,'' Addiction, published
online April 14, 2019, https://doi.org/10.26099/by07-xs93.
\17\ A.R. Roberts, et al., Medicaid prescription limits and their
implications for naloxone accessibility, Drug and Alcohol Dependence,
Vol. 218, January 2021, https://www.sciencedirect.com/science/article/
pii/S0376871620305202?via%3Dihub.
\18\ Gery P. Guy Jr. et al., ``Vital Signs: Pharmacy-Based Naloxone
Dispensing--United States, 2012-2018,'' CDC MMWR Vital Signs 68, no. 31
(August 2019): 679-86, https://www.cdc.gov/mmwr/volumes/68/wr/
mm6831e1.htm?s_cid=mm6831e1_w%22.
State laws mandating coprescription of naloxone have been
associated with increased naloxone provision, but significant variation
among States remains and analysis of Medicare data has shown low rates
of coprescribing.\19\
---------------------------------------------------------------------------
\19\ Traci C. Green et al., ``Laws Mandating Coprescription of
Naloxone and Their Impact on Naloxone Prescription in Five U.S. States,
2014-2018,'' American Journal of Public Health, 110, no. 6 (June 2020):
881-887, https://pubmed.ncbi.nlm.nih.gov/32298179/; Christopher M.
Jones et al., ``Naloxone Co-prescribing to Patients Receiving
Prescription Opioids in the Medicare Part D Program, United States,
2016-2017,'' JAMA, 322, no. 5 (August 2019): 1-3, https://
jamanetwork.com/journals/jama/fullarticle/2740706.
Question. We are seeing tremendous progress with therapeutic and
technological innovations that could soon cure diseases such as Sickle
---------------------------------------------------------------------------
Cell Disease.
As the science outpaces policy, how can reimbursement arrangements
and public programs evolve to ensure immediate patient access for one-
time curative treatments?
Answer. This is a complicated question that first requires common
definition of the terms ``one-time curative'' and ``immediate.''
Congress could ask the National Academy of Medicine (NAM) to convene a
consensus study to identify key parameters to help define these terms.
Further, an expert body such as the NAM could offer recommendations for
what conditions warrant government regulation or legislation in this
critical area and what remedies may be appropriate.
Equity considerations are paramount in this discussion, which your
example of Sickle Cell Disease, underscores. This is a condition that
disproportionately impacts people of color and in which historically,
treatments options have been limited. As potential ``curative''
treatments are developed and brought to market, it will be important to
ensure that those that need the treatments are able to access and
afford the treatment. Care must be taken to ensure that policies around
access and reimbursement do not disproportionately disadvantage
communities of color.
This is especially important as Medicaid programs weigh the patient
needs and the costs of such treatments given their beneficiary mix.
Uncertainty around pricing of high cost, potentially ``curative''
treatments presents a particularly difficult forecasting and budget
challenge for Medicaid programs and State policymakers given the
requirement to balance their budgets each year.
______
Question Submitted by Hon. James Lankford
Question. The Affordable Care Act allows taxpayer funding for
abortion on demand, but at the very least it acknowledged the right of
States to prohibit abortion coverage on the exchanges and that abortion
could not be required as an essential health benefit. Eleven of the 12
States that have chosen not expand Medicaid have also chosen to
prohibit abortion coverage on the exchanges. As written, the Democrats'
reconciliation proposal would override these State laws and mandate
coverage of, and funding for, abortions on demand, and transportation
services to acquire them, for those under 138 percent of poverty and
without cost sharing in 2024. However, the bill refers to abortions in
an underhanded way.
Do you agree that abortion coverage is mandated and funded by the
proposed reconciliation bill's reference to family planning services
``which are not otherwise provided under such plan as part of the
essential health benefits package'' (subsection (c) of section 137505)?
Answer. The ACA and Executive Order 13535 \20\ clarify that Federal
funding (including premium subsidies and cost-sharing subsidies) cannot
be used to pay for abortion services, unless to save the life of the
mother or in the case of rape or incest. The ACA also cannot require
health plans to provide abortion coverage. Many plans do offer abortion
services, but coverage of those services cannot be financed with
Federal dollars, unless to save the life of the mother or in the case
of rape or incest. Several States do not allow health plans to cover
abortion services at all.
---------------------------------------------------------------------------
\20\ https://www.healthinsurance.org/faqs/do-health-insurance-
plans-in-acas-exchanges-cover-abortion/.
The reconciliation bill would not change these facts for people who
---------------------------------------------------------------------------
will become newly eligible for marketplace coverage.
______
Prepared Statement of Hon. Mike Crapo, a U.S. Senator From Idaho
Thank you, Mr. Chairman, and welcome to our witnesses. I would
especially like to thank Senator Scott for coming today and for
highlighting the critical role States play in our health-care system,
as well as how we can work to address affordability issues for all
Americans.
As we look toward the future of our health-care system, we have a
responsibility to enhance care quality, to increase affordability, and
to improve access to lifesaving services and treatment options, from
diagnostics to cutting-edge therapies. Any reforms we adopt moving
forward should build on what works within our current system, in
addition to addressing hurdles to high-quality, low-cost care.
We should look to the unprecedented success of Medicare Part D and
Medicare Advantage, which empower consumers to choose what works best
for them. In contrast with top-down, bureaucratic health-care models,
these programs leverage choice and competition to expand coverage while
lowering costs and enhancing care quality.
Outside of Medicare, these same core principles have driven a wide
range of promising reforms. Employers, who provide coverage to roughly
half of the population, have adopted diverse tools and models to
incentivize workers to seek out lower-cost, higher-quality care
options. States have adopted waivers and flexibilities to tailor their
Medicaid programs to best meet their needs and strategic goals. Our
health-care system has substantial room for improvement, but these
creative and market-based models provide a compelling blueprint for
bipartisan reform.
We have seen strong bipartisan backing for proposals to expedite
Medicare coverage for cutting-edge devices, to avoid a telehealth
access cliff for seniors, and to cap out-of-pocket spending under Part
D. I have also worked with multiple members of this committee on both
sides of the aisle to ensure Medicare beneficiary access to tests that
detect dozens of cancers at an early stage, reducing mortality and
allowing for proactive care. These types of policies have the potential
to lower consumer costs while improving health-care outcomes.
Unfortunately, some of the proposals currently under consideration risk
moving in the opposite direction, with potentially dire unintended
consequences for Americans. In addition to exacerbating inflation and
weakening our economic recovery, the trillions of dollars in taxing and
spending proposed by House Democrats would advance a range of policies
that could hinder health-care outcomes and drive up costs, with
taxpayers bearing the burden.
The proposed drug price controls, imposed under the guise of
negotiation, pose a threat to our global leadership in biomedical
innovation. A recent University of Chicago study found that the price-
fixing policies included in the bill would slash research and
development funding by up to 60 percent, reduce the number of new drugs
approved in the next 20 years by as many as 342, and trigger a loss of
life as much as twenty times what the COVID-19 pandemic has inflicted
on our Nation.
House Democrats have also proposed making their poorly targeted
Obamacare premium subsidy hike permanent. This proposal does nothing to
improve Obamacare plans or to address underlying health-care costs. The
administration has also taken a series of steps that risk constraining
consumer choices, delaying or weakening coverage and undermining
innovation.
A number of States that had devoted months, if not years, to
crafting comprehensive improvements to their Medicaid programs saw
their hard work thrown away overnight as the administration rescinded
their waivers, seemingly for political reasons. This approach
undermines the State-Federal partnership at Medicaid's core and creates
tremendous uncertainty, in addition to eliminating opportunities for
innovation.
The administration also announced plans to roll back a popular rule
aimed at expediting access to lifesaving medical devices for seniors.
This regulation would be a game-changer for patients suffering from
cancer, diabetes, and a broad range of other conditions.
Disappointingly, it may never go into effect.
I stand ready and eager to work with the administration and members
of both parties to pursue policies that improve health-care outcomes,
expand access to life-saving drugs and devices, and drive down costs
for both the consumer and the taxpayer. From telehealth expansion to
outcomes-based payment arrangements, there are endless opportunities
for us to come together on common ground and meet the needs of the
American people. We should set aside needless tax hikes and wasteful
spending and instead take advantage of these opportunities.
I again thank the witnesses for their time. We look forward to
hearing from you all.
______
Prepared Statement of Douglas Holtz-Eakin, Ph.D.,*
President, American Action Forum
---------------------------------------------------------------------------
* The views expressed here are my own and not those of the American
Action Forum. I thank Margaret Barnhorst and Jackson Hammond for their
assistance.
---------------------------------------------------------------------------
introduction
Chairman Wyden, Ranking Member Crapo, and members of the committee,
thank you for the opportunity to discuss health insurance coverage in
America and the role of Federal programs. In this testimony, I hope to
make three main points:
The vast majority of Americans are covered by health
insurance, with private insurance provided by employers being the
leading source of coverage.
During 2020, the onset of the pandemic slightly reduced
private insurance, but public safety net programs offset the loss and
left the fraction of Americans uninsured roughly unchanged.
Despite this success, key public programs--Medicare and
Medicaid--can benefit from reforms that raise the value of the care
provided to their beneficiaries.
Let me discuss each of these in greater detail.
sources of health-care coverage
Pre-COVID-19 Coverage
Released last month, the Census Bureau's report, ``Health Insurance
Coverage in the United States: 2020,'' describes the state of health
insurance coverage from 2020, based on data collected in the Current
Population Survey Annual Social and Economic Supplement (CPS ASEC). The
survey was conducted from February to April 2021 and asked participants
about health insurance held at any time throughout 2020. Given the
wording of the question, people are considered uninsured in 2020 only
if they had no coverage at any time during the year, and they are
instead counted in the coverage group for insurance they held at the
beginning of the year, and potentially in more than one group if they
transitioned. Ultimately, those who lost coverage in 2020 due to the
COVID-19 pandemic are not included in the uninsured rate for 2020.
Therefore, the 2020 report provides the most recent look at health
insurance coverage in the United States just prior to the effects of
the pandemic.\1\
---------------------------------------------------------------------------
\1\ https://www.census.gov/content/dam/Census/library/publications/
2021/demo/p60-274.pdf.
According to the report, 66.5 percent of people in the United
States had private coverage in 2020, 34.8 percent had public coverage,
and 8.6 percent of people in the United States, or 28.0 million, did
not have health insurance at any point during the year. Employer-
sponsored insurance (ESI) remained the most common sub-type of health
insurance, with 54.4 percent of the population covered for some or all
of the calendar year, followed by Medicare (18.4 percent), Medicaid
(17.8 percent), direct-purchase coverage (10.5 percent), TRICARE (2.8
percent), and coverage through Veterans Affairs (VA) or Civilian Health
and Medical Program of the Department of Veterans Affairs (0.9
---------------------------------------------------------------------------
percent).
The report also details health insurance coverage across various
demographic groups, displaying disparities in coverage that existed
prior to the pandemic. In 2020, Hispanics, inclusive of all races, had
the highest uninsured rate (18.3 percent), followed by Blacks (10.4
percent), Asians (5.9 percent), and non-Hispanic Whites (5.4 percent).
Blacks had the highest rate of public coverage at 41.4 percent, while
non-Hispanic Whites had the highest rate of private coverage (73.9
percent).
Adults aged 65 and older and children under age 19 were more likely
to have coverage than those aged 19 to 64, given their age-eligible
status for Federal programs. Only 1.0 percent of those aged 65 or older
and 5.6 percent of those under age 19 were uninsured for all of 2020,
compared to 11.9 percent of those aged 19 to 64.
Poverty and employment also contributed to disparities in health-
care coverage in 2020. Those living in poverty, with an income below
100 percent of the Federal Poverty Level (FPL), were most likely to be
uninsured for the entire calendar year at 17.2 percent, while those
with incomes above 400 percent of the FPL were the least likely to be
uninsured (3.4 percent). Additionally, among adults aged 19 to 64
years, 12.9 percent of those who did not work at least one week in the
year were uninsured for the entire calendar year, compared to 8.4
percent of full-time, year-round workers. Many adults receive health
insurance through their employer, and in 2020, 87 percent of full-time,
year-round workers were covered by private insurance.
COVID-19 Impacts on Coverage
Since the second quarter of 2020, the COVID-19 pandemic has
affected the United States economy and the health insurance market.
Over half of the United States population received health insurance
through their employer prior to the pandemic, leaving room for
significant impacts on health coverage following the loss of 22.2
million jobs between March and April 2020. Last year, several studies
attempted to predict pandemic-related losses in coverage, estimating
between 3.5 to 5.7 million would become uninsured due to loss of
ESI.\2\, \3\ Given the ongoing nature of the pandemic and
the lack of significant real-time data, there is still no finite gauge
on the effects of the pandemic on insurance coverage, yet more recent
preliminary estimates suggest that the effects have not been nearly as
detrimental as initially feared.
---------------------------------------------------------------------------
\2\ https://www.urban.org/research/publication/changes-health-
insurance-coverage-due-covid-19-recession.
\3\ https://www.kff.org/coronavirus-COVID-19/issue-brief/
eligibility-for-aca-health-coverage-following-job-loss/.
Last month, researchers at Duke University and Indiana University-
Purdue University Indianapolis released a report that found nearly 2.7
million people in the United States lost their health insurance in the
spring and summer months (April 23-July 21, 2020), based on data from
the Census Bureau's 2020 Household Pulse Survey.\4\ This change
represented a decline of 1.36 percentage points over the 12-week
period. By the fall and winter months (August 19-December 21, 2020),
they found enrollment in other coverage types rose enough to offset the
loss in ESI, resulting in an insignificant change in the uninsured rate
in the fall and winter months of 2020.
---------------------------------------------------------------------------
\4\ https://jamanetwork.com/journals/jama-health-forum/fullarticle/
2783874.
Based on the same data from the 2020 Household Pulse Survey, the
Urban Institute estimated that 3.3 million adults lost ESI and 1.9
million became uninsured from April 23-July 21, 2020. In their
estimates, the overall uninsured rate increased by 1 percentage point
in this time period but increased 3.8 percentage points among Hispanic
adults and increased 1.6 percentage points among adults with a high
school degree or less. Additionally, public coverage rose by 1.1
percentage points during this 3-month period.\5\
---------------------------------------------------------------------------
\5\ https://www.urban.org/sites/default/files/publication/102852/
as-the-covid-19-recession-extended-into-the-summer-of-2020-more-than-3-
million-adults-lost-employer-sponsored-health-insurance-coverage-and-2-
million-became-uninsured.pdf.
A December 2020 report from the Kaiser Family Foundation (KFF)
reached similar numbers using employment rates and enrollment in the
fully insured group market to extrapolate a rough estimate for the
entire ESI market, concluding that approximately 2 to 3 million people
lost ESI between March and September 2020.\6\ They also note, however,
that losses in ESI were largely offset by gains in Medicaid and
marketplace enrollment.
---------------------------------------------------------------------------
\6\ https://www.kff.org/policy-watch/how-has-the-pandemic-affected-
health-coverage-in-the-u-s/.
A study from the Heritage Foundation, based on data from the
National Association of Insurance Commissioners, found a 7 percent
increase in Medicaid and Children's Health Insurance Program (CHIP)
enrollment in the first three quarters of 2020, reflective of
government measures to address pandemic-related loss of coverage, such
as the temporary increase in Federal funding for State Medicaid
programs and the maintenance of eligibility provisions in the Families
First Coronavirus Response Act.\7\ More recently, in June 2021, CMS
championed record increases in Medicaid and CHIP enrollment, citing a
13.9 percent increase between February 2020 and January 2021.\8\ It
appears that countercyclical social safety net programs are meeting
demand without expansion or increased Federal funding, though they
should not become a primary source of health coverage for Americans.
---------------------------------------------------------------------------
\7\ https://www.heritage.org/public-health/report/covid-19-effects-
the-response-health-insurance-coverage-and-claims.
\8\ https://www.medicaid.gov/medicaid/national-medicaid-chip-
program-information/downloads/april-2021-medicaid-chip-enrollment-
trend-snapshot.pdf.
While the pandemic may have led to a shift in the distribution of
coverage across subtypes, overall coverage rates remained steady for
several reasons. Those that lost employment were likely never enrolled
in ESI; lower-wage workers are less likely to be covered by an employer
plan, and pandemic-related job losses were most pronounced in
industries with lower coverage rates.\9\ People who did lose ESI as a
result of job loss qualified for a special enrollment period for
marketplace coverage, and low-income individuals or families may have
become eligible for Medicaid or CHIP. Additionally, many employers
continued to temporarily offer ESI or premium support to furloughed or
laid-off employees, which further mitigated the pandemic's effects on
overall coverage.\10\
---------------------------------------------------------------------------
\9\ https://www.kff.org/policy-watch/how-has-the-pandemic-affected-
health-coverage-in-the-u-s/.
\10\ https://www.bls.gov/brs/2020-results.htm.
If preliminary estimates are true and the uninsured rate has indeed
remained steady, there are still around 28 million people without
health insurance. Yet according to KFF, 57 percent of the typical non-
elderly uninsured population are eligible for, but do not enroll in,
free or subsidized coverage. Based on 2019 data, around 40 percent of
the typical non-elderly, uninsured population are eligible for free
insurance through either Medicaid (24 percent) or a marketplace bronze
plan with a $0 premium (16 percent). In addition, 17 percent are likely
eligible for subsidized coverage through marketplaces.\11\ Using 2017
data, KFF estimated in another study that roughly 15 percent of the
typical non-elderly uninsured population is ineligible for subsidies
due to undocumented immigrant status, 14 percent declined an offer of
ESI, and 7 percent had incomes above 400 percent of the FPL, making
them ineligible for subsidies.\12\ Ultimately, it is not clear that
expanding Federal programs would necessarily cover these populations.
In January 2021, 2.2 million individuals fell in the coverage gap as a
result of States electing not to expand their Medicaid programs under
the Affordable Care Act.\13\
---------------------------------------------------------------------------
\11\ https://www.kff.org/policy-watch/millions-of-uninsured-
americans-are-eligible-for-free-aca-health-insurance/.
\12\ https://files.kff.org/attachment/The-Uninsured-and-the-ACA-A-
Primer-Key-Facts-about-Health-Insurance-and-the-Uninsured-amidst-
Changes-to-the-Affordable-Care-Act.
\13\ https://www.kff.org/uninsured/issue-brief/the-coverage-gap-
uninsured-poor-adults-in-states-that-do-not-expand-medicaid/.
Much is still unknown about the future of COVID-19 and its
lingering effects on health coverage. Looking ahead, policymakers
should explore why people forgo viable coverage options, identify those
that are truly without coverage options, and focus on the subset of
individuals living in non-expansion States.
drivers of health-care costs
According to the 2019 National Health Expenditure Account from the
Centers for Medicare and Medicaid Services (CMS), individuals, health
insurers, and Federal and State governments spent a combined $3.8
trillion on health expenditures in 2019, accounting for 17.7 percent of
the national gross domestic product (GDP).\14\ From 2010-2018, national
health expenditures have grown an average of 4.5 percent each year
compared to the previous year, but spending remained around 17 percent
of national GDP.\15\
---------------------------------------------------------------------------
\14\ https://www.cms.gov/files/document/highlights.pdf.
\15\ https://www.cdc.gov/nchs/data/hus/2019/044-508.pdf.
In 2019, roughly 73 percent of total health expenditures, or
approximately $2.77 trillion, was spent on health insurance: private
health insurance spending accounted for 31 percent of total health
expenditures, Medicare accounted for 21 percent, Medicaid accounted for
16 percent, and other health-care services (including VA, Department of
Defense, and CHIP) made up 4 percent.\16\ Based on this data, spending
per beneficiary in 2019 was highest for Medicare ($13,276), followed by
Medicaid ($8,485) and private health insurance ($5,927). The remaining
27 percent of total health expenditures was split between out-of-pocket
(OOP) costs (11 percent), other third-party payers and programs (9
percent), investments (5 percent) and government public health
activities (3 percent).\17\
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\16\ National Health Expenditures 2019 Highlights (cms.gov).
\17\ The Nation's Health Dollar ($3.8 Trillion), Calendar Year
2019: Where It Came From (cms.gov).
A number of factors can drive health-care costs--including, but not
limited to provider consolidation, rising prices of health services, a
growing, aging, or sicker population--yet pouring more money into the
issue will not necessarily improve coverage, especially in the case of
Medicare. According to the Medicare trustees report released on August
31st of this year, the Medicare trust fund, which covers hospital
services through Medicare Part A, will be depleted in 2026. In 2020,
Medicare spending resulted in a $495.5 billion deficit, which accounted
for 16 percent of the Federal debt. Despite the fact that it would
require a nearly 33 percent increase in Medicare payroll taxes to cover
the Part A cash shortfalls in 2020, progressives continue to push
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costly agendas to expand the program.
At the start of the pandemic in spring 2020, social distancing
measures and attempts to mitigate the spread of the virus led to
cancellations of elective procedures and outpatient appointments.
Despite subsequent increases in health spending as demand grew for
laboratory services and hospitals resumed procedures at the end of the
year, overall health spending fell slightly in 2020, according to
analysis from the Peterson-KFF Health System Tracker.\18\ Total health
spending in December 2020 was 1.5 percentage points lower than total
health spending from December 2019. Yet GDP fell by 3.5 percent in
2020, meaning that total health spending likely represented a greater
share of overall national spending for the year. The sustained decrease
in the utilization of preventative services and chronic disease
screenings may have long-term impacts on health outcomes and health
costs.\19\
---------------------------------------------------------------------------
\18\ https://www.healthsystemtracker.org/chart-collection/how-have-
healthcare-utilization-and-spending-changed-so-far-during-the-
coronavirus-pandemic/#item-start.
\19\ https://www.healthsystemtracker.org/chart-collection/how-have-
healthcare-utilization-and-spending-changed-so-far-during-the-
coronavirus-pandemic/#item-covidcostsuse_marchupdate--2.
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room for improvement
While over half of the United States population receives health
insurance through their employer, a significant portion of the
population relies--for better or worse--on Federal and State programs
for health-care coverage. For these individuals, the future of health-
care coverage should focus on enhancing existing Federal programs to
balance costs and provide high value care.
Medicare Advantage
Medicare Advantage (MA) allows beneficiaries to enroll in plans
managed by private insurers, as opposed to partaking in the traditional
fee-for-service (FFS) Medicare program. MA's popularity continues to
grow, because it provides beneficiaries with expanded choices of plans
and coverage options at affordable prices.\20\ In fact, MA has
leveraged the power of competition to control costs. Average premiums
for MA plans have continuously decreased since 2015, with average
premiums at $21 a month this year.\21\ Additionally, MA beneficiaries
spend 40 percent less on OOP costs than FFS beneficiaries and nearly
two-thirds of MA seniors are in $0 premium plans.\22\ These savings are
significant, especially when considering that more than half of all MA
enrollees live on an annual income of less than $24,500.\23\
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\20\ https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-
medicare-advantage-in-20
19/.
\21\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
in-2021-premiums-cost-sharing-out-of-pocket-limits-and-supplemental-
benefits/.
\22\ Average annual beneficiary health-care costs for various
Medicare coverage options (milliman.com).
\23\ BMA-Data-Brief-March-2021-FIN.pdf
(bettermedicarealliance.org).
The average MA enrollee chooses from 33 plans offered by 8
different issuers in their geographic area,\24\ and there is even some
evidence that MA enrollment leads to better health outcomes: MA
enrollees have 33 percent fewer emergency department visits and 23
percent fewer hospital visits than those in FFS Medicare.\25\ MA
beneficiaries also experienced lower COVID-19 hospitalization and
mortality rates than FFS beneficiaries, perhaps in part due to
coordinated care services for seniors that included vaccination
support, meal delivery, and at-home testing.\26\
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\24\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
2021-spotlight-first-look/.
\25\ https://avalere.com/press-releases/medicare-advantage-
achieves-better-health-outcomes-and-lower-utilization-of-high-cost-
services-compared-to-fee-for-service-medicare.
\26\ BMA-Q3-Data-Brief-FIN-1.pdf (bettermedicarealliance.org).
Enrollment in MA continues to grow, with 42 percent of current
Medicare beneficiaries enrolled in MA as of March of this year and 51
percent of Medicare beneficiaries expected to be enrolled in MA by
2030.\27\ MA beneficiaries are proportionally more diverse, lower
income, and more complex than those in FFS: racial minorities make up a
larger share of the MA population (33 percent) than they do of the FFS
population (16 percent).\28\ MA costs $7 billion more a year than
traditional Medicare, largely because of the supplemental benefits MA
plans offer, such as dental, hearing, and vision.\29\ Yet, in the grand
scheme of a $776-billion entitlement program, $7 billion amounts to
less than 1 percent of total spending.\30\
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\27\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
in-2021-enrollment-update-and-key-trends/.
\28\ BMA-State-of-MA-Report-2021.pdf (bettermedicarealliance.org).
\29\ https://www.kff.org/medicare/press-release/payments-to-
medicare-advantage-plans-boosted-medicare-spending-by-7-billion-in-
2019/.
\30\ https://www.pgpf.org/budget-basics/
medicare#::text=Medicare%20accounts%20for%20a%
20significant,of%20total%20federal%20government%20spending.
Rather than pursuing costly agendas to expand supplemental benefits
or lower the Medicare eligibility age, advocates for enhancing health-
care coverage for the elderly should focus on bolstering MA.
Medicare Part D Reform
Medicare Part D provides Medicare beneficiaries with access to
subsidized prescription drug coverage, and in 2021, 48 million seniors,
or 77 percent of all Medicare beneficiaries, enrolled in Part D
benefits.\31\ While the program has been largely successful, it
represents approximately a third of all drug spending in the United
States, and its current structure, along with pricing incentives in the
broader pharmaceutical market, creates perverse incentives for insurers
and drug manufacturers to benefit from high-cost drugs.
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\31\ https://www.kff.org/medicare/issue-brief/key-facts-about-
medicare-part-d-enrollment-premiums-and-cost-sharing-in-2021/.
Growing pharmaceutical expenditures in the past several years,
driven by a significant increase in both the number of beneficiaries
reaching catastrophic coverage and the costs that each of them incur,
have led to a resounding push to reform Part D to realign incentives.
Spreading the risk for high-cost beneficiaries to insurers and drug
manufacturers, while capping the liability of beneficiaries, could
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induce behavioral changes that lead to lower costs for all parties.
Reforms should include placing a true cap on beneficiary OOP
expenditures, eliminating the coverage gap phase entirely and instead
requiring drug manufacturers to pay rebates during the catastrophic
phase, reducing the Federal Government's reinsurance rate, and
increasing plans' liability in the catastrophic phase. Under a Part D
redesign such as the one proposed by the American Action Forum in 2018,
assuming a maximum OOP (MOOP) cap of $2,500, would collectively save
beneficiaries $7.4 billion over 10 years (from 2020-2029). Each
beneficiary would see an increase in their premiums of only $61 over
the entire 10-year window, or an average monthly increase of $0.51.
Across all beneficiaries, the reduced cost-sharing expenses would more
than offset the increase in premiums paid.
In this same proposal, the Federal Government would be expected to
save $23.4 billion over 10 years if a $2,500 MOOP were implemented in
2020 and a 5-percent reduction in brand drug spending occurred. While
total premium subsidies would increase $637.4 billion, reinsurance
expenditures would decline by $473.2 billion, and low-income subsidy
cost-sharing subsidies would decline by $187.6 billion.
If the maximum OOP cap is increased, however, expected overall
beneficiary savings would decrease while Federal Government savings
would increase. With a $4,000 maximum OOP cap, the Federal Government
would save $31 billion over the 10-year period, and beneficiaries would
save $400 million over 10 years. In this scenario, premium increases
would offset nearly all of the expected reductions in cost sharing.
Insurers will want to find ways to counter beneficiaries' loss of
incentive to use lower-cost alternatives; such tools already at plans'
disposal include requiring pre-authorization or step therapy for
coverage of higher-cost drugs. Beneficiaries may resist if the tools
impose too much of a barrier to accessing their preferred drug. If
policymakers take seriously the effort to reduce expenditures and use
of low-value health-care products, however, they will have to make
tradeoffs. Alternatively, current rules could be loosened to provide
plans more options to control costs in ways that are less punitive or
burdensome to beneficiaries. This approach could include greater
formulary flexibility such as loosening the protected classes
requirements and allowing more narrow coverage options in certain
therapeutic classes, as recommended by MedPAC.\32\
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\32\ http://www.medpac.gov/docs/default-source/reports/
mar18_medpac_ch14_sec.pdf.
That being said, restructuring the benefit design of Medicare Part
D in a way that realigns incentives away from high-cost, high-rebate
drugs may be the best option to reduce overall program costs as well as
drug prices in other parts of the market.
Managed Medicaid
Medicaid managed care programs can assist States in reducing
Medicaid costs and better utilizing health services to improve outcomes
for Medicaid beneficiaries. While traditional FFS Medicaid encourages
greater use of services and use of more expensive services as it
reimburses providers for each service performed without any quality
controls or value assessments of services, Managed Care Organizations
(MCOs) are required to meet certain quality standards as part of their
contract with the State and are paid a fixed amount for each enrollee,
thus eliminating the incentive to provide unnecessary services. As of
this year, 40 States and the District of Columbia use MCOs.
MCOs establish a network of providers and connect patients with a
primary care provider, disincentivize overutilization of services or
use of high cost services, and incentivize and encourage wellness and
preventive services. These and other cost management strategies to
discourage resource use, limit subspecialists and/or require approvals
for referrals work very well for generally healthy populations with
preventive and episodic health needs. Chronic complex populations,
particularly children, have many specialized needs that must be closely
integrated and delivered in a coordinated fashion, often on a daily
basis, to be effective.
While all individuals can benefit from managed care programs,
individuals with above-average health-care needs will benefit the most
from the stricter regulations regarding quality of care and beneficiary
protections. Future efforts to improve MCOs should focus on enrolling
higher-cost populations. The aged and disabled are the costliest
Medicaid beneficiaries, therefore their lack of enrollment in managed
care programs (and thus their continued enrollment in FFS Medicaid) has
resulted in much of the potential benefit offered by such programs to
go unrealized. Aged and disabled beneficiaries account for 60 percent
of all Medicaid expenditures despite being only a quarter of the
Medicaid population.\33\ As such, despite 69 percent of Medicaid
beneficiaries being enrolled in MCOs in 2018, only 46.2 percent of
total Medicaid spending was spent on MCOs in 2019.\34\
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\33\ http://kff.org/other/state-indicator/total-medicaid-mco-
spending/?currentTimeframe=0&
sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
\34\ https://www.kff.org/other/state-indicator/total-medicaid-mco-
enrollment/?currentTime
frame=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
Adults and children with chronic or complex medical conditions have
expenditures far above the average for those without such conditions,
yet many of these individuals with complex needs are not receiving the
most appropriate or beneficial care, and they--and the Medicaid
budget--are worse off because of it. A more integrated and coordinated
approach through managed Medicaid would expand coverage for the most
vulnerable populations while controlling costs and improving outcomes
for all.
conclusion
Collectively, Americans are getting older, living longer, and
becoming increasingly burdened with chronic diseases.\35\ Looking to
the future, the Federal Government should focus on maximizing spending
power and improving the value of existing programs to ensure
sustainable and high-quality health care.
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\35\ https://www.cdc.gov/chronicdisease/resources/infographic/
chronic-diseases.htm.
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Thank you. I look forward to answering your questions.
______
Questions Submitted for the Record to Douglas Holtz-Eakin, Ph.D.
Questions Submitted by Hon. Mike Crapo
Question. Included in this reckless tax and spending spree is a
proposal to create a new Federal health benefit for individuals in
States that chose not to adopt the optional Medicaid expansion. The
legislative language, however, is incredibly broad.
Is it your understanding that this proposal, as drafted, would
allow wide latitude to the Secretary of HHS to develop a program that
would be akin to a public option?
Answer. As originally drafted, this proposal could have eventually
become something akin to a public option if the program were later
expanded.
Question. Furthermore, would it be in the Secretary's best interest
to stand up a Nationwide program utilizing as few managed care plans as
possible, similar to the operations of TRICARE?
Answer. Using fewer managed care programs would go against the
grain of what States Nationwide have done. In Medicaid programs in 40
States and DC, officials have chosen to contract with managed care
plans to provide lower costs and better-utilized services to Medicaid
beneficiaries. Not using managed care programs could result in higher
costs for the same or worse quality Nationwide.
Question. For the vast majority of people who purchase coverage on
the Obamacare exchanges, the U.S. Treasury pays most of their premiums
via direct payments to health insurers.
For 2021 and 2022, the American Rescue Plan Act (ARPA) increased
the amount of those subsidies and lifted the cap on subsidy eligibility
(which was at 400 percent of the Federal poverty line), sending Federal
subsidies to people earning more than $100,000 and up to $500,000. The
House Democrats' proposal seeks to permanently adopt these subsidy
expansions.
CBO suggests that this subsidy expansion provides much greater
support for upper-income households than for lower-income households.
Do you agree with those findings?
Answer. Yes.
Question. If so, can you walk us through why that is the case?
Answer. It is true, practically by definition. Removing the cap on
eligibility for subsidies benefits only higher-income individuals,
while expanding the generosity helps all income levels somewhat. The
net impact is largely a benefit to the more affluent.
Question. The House Democrats' drug pricing proposal frames its
price controls as negotiation, but the process it creates looks more
like bureaucratic price-fixing. Their legislation would force life
sciences manufacturers, roughly two-thirds of which are start-ups, to
the table under the threat of an excise tax of up to 95 percent,
raising grave constitutional questions.
The proposal would then cap prices based on an international
benchmark, essentially importing top-down, one-size-fits-all programs
from abroad, including many that rely on quality-adjusted life years,
or QALYs. These metrics face strong resistance from advocates for aging
Americans, as well as those with disabilities, since QALYs tend to
treat their lives as less valuable. This system, in short, is a far cry
from the market-based negotiations that currently occur in the Medicare
Part D program.
Do you believe that the price-setting framework included in Speaker
Pelosi's drug pricing bill would facilitate meaningful negotiation?
Answer. No. At a very basic level, the government would ultimately
set the parameters for the negotiation. The government would determine
whether a manufacturer had complied with those parameters. And the
government would level substantial penalties on manufacturers who do
not comply with its price concession demands. The more one drills down,
the clearer it becomes that the process envisioned cannot be reasonably
called a negotiation.
Question. The nonpartisan Congressional Budget Office relied on
QALYs to model how the bill's price controls would work in practice,
and many of the foreign price controls imported by the proposal are at
least partially QALY-based.
What do you see as some of the potential drawbacks or tradeoffs
from the use of QALYs in the context of drug pricing and health care
more broadly?
Answer. QALYs assign an arbitrary dollar value to a year of one's
life and the QALY methodology for drug pricing, especially to assess
the value of rare disease drugs and new therapies, is also arbitrary
and fails to account for societal or non-health benefits that result
from improved health. These valuations necessarily require judgments
about the value of a year of life--or fraction thereof--or the quality
of that year. Decisions about value that have traditionally been made
by patients and their doctors would be turned over to bureaucrats and
academics. This type of evaluation system is typical of many countries
with lower drug prices, where politicians have been willing to forego
access to innovative treatments for their populations in order to limit
health-care costs. Given the aforementioned limitations of QALY
measurements for the elderly, disabled, and terminally or chronically
ill, the Affordable Care Act banned their use in Medicare formularies.
QALYs attempt to standardize measurements across diverse conditions and
consider the value individuals place on their health care, but the
health-care system is complex and difficult to replicate in a single
model. Ultimately, QALYs make arbitrary assessments of the value of
life and have the potential to limit access to new life-saving
medicines and therapies.
Question. In 2003, Congress enacted bipartisan legislation that
created Medicare Part D and modernized Medicare Advantage, or MA, as a
market-based alternative to fee-for-service coverage for seniors. Both
programs have achieved incredible success, with high satisfaction
rates, dynamic enrollment growth, and a range of diverse choices for
seniors.
What lessons can we take from Part D and MA as we look to enhance
coverage, quality and access across other Federal programs and health-
care markets?
Answer. Medicare Advantage (MA) has leveraged the power of
competition to control costs and provide beneficiaries with expanded
choices of plans and coverage options. The average MA enrollee chooses
from 33 plans offered by 8 issuers in their geographic area, and there
is evidence that MA enrollment leads to better health outcomes: MA
enrollees have 33 percent fewer emergency department visits and 23
percent fewer hospital visits than those in fee-for-service (FFS)
Medicare. Additionally, MA beneficiaries have experienced lower COVID-
19 hospitalization and mortality rates compared to those in FFS
Medicare, due in part to the comprehensive and coordinated care
options. MA's popularity continues to grow as it provides beneficiaries
with affordable prices. Average premiums for MA plans have continuously
decreased since 2015, with average premiums at $21 per month in 2021.
MA beneficiaries spend 40 percent less on out-of-pocket costs compared
to FFS beneficiaries and many MA enrollees have access to $0 premiums:
In 2020, roughly 60 percent of MA enrollees paid no premium.
In Part D, direct negotiation by the Secretary of Health and Human
Services has been expressly forbidden, yet the program nevertheless
sees aggressive negotiation over the prices of medications between Part
D plan sponsors and drug manufacturers. This competitive process is the
key factor in the program's success to date. Today, Part D
beneficiaries have access to 27 different plans, on average, enabling
individuals to choose a plan that is tailored to their needs. Because
there are a number of plan options for beneficiaries, individual plans
have the ability to use preferential tiering strategies to negotiate
discounts for specific drugs. If a beneficiary requires or desires a
specific medication that is not on the preferred formulary (or covered
at all) for one plan, they can choose to sign up for a different plan
that provides the medication at a more desirable price. Total program
expenditures for Part D came in far lower than initial CBO projections
by about 48 percent. All that being said, however, Medicare Part D is
still in need of reform to realign incentives by placing greater
financial risk on insurers and drug manufacturers and protecting
beneficiaries from catastrophic financial risk.
Question. What effects, from your perspective, would the House
Democrats' drug price control proposals have on Part D moving forward?
Answer. The specific price control mechanisms, such as inflation
penalties and the maximum price ceiling for Medicare negotiations, that
have been misleadingly called ``price negotiation'' limit how much
Medicare will pay for certain drugs. This could result in Part D plans
losing access to some prescription drugs that do not make the
formulary. Additionally, the very high levels of liability ascribed to
manufacturers will reduce profits and therefor likely reduce research
and development initiatives for new medicines--which will hurt all
Americans, including Part D beneficiaries, but especially those with
rare or complex conditions.
Question. Medicare's telehealth coverage and payment policies have
drawn criticism from across the political spectrum, and for good
reason. Prior to the COVID-19 pandemic, outdated statutory and
regulatory requirements have made it nearly impossible for most seniors
to access telehealth services in a meaningful way, exacerbating access
gaps, particularly for rural and underserved communities.
Fortunately, last year, Congress acted to establish emergency
flexibilities and ensure widespread telehealth availability for
Medicare beneficiaries. This temporary relief, however, will expire at
the end of the ongoing public health emergency, resulting in a coverage
cliff for tens of millions of older Americans.
I am confident that we can develop long-term, responsible and
bipartisan solutions to modernize Medicare's telehealth policies. That
said, I was disappointed to see that the House Democrats' taxing and
spending proposals would do nothing to address the impending access
cliff. Seniors, health-care providers and innovators deserve certainty
and stability on this front, and we should set aside partisan processes
to tackle urgent issues like this one instead.
If Congress turns to telehealth in the coming months, what
considerations should we bear in mind as we work to craft fiscally
responsible policies that meaningfully expand access?
Answer. Equitable payments between telehealth and in-person visits
are a potential concern. While telehealth visits may be appropriate and
effective for certain behavioral health treatments like talk therapy,
they are inherently less effective for other conditions, especially
physical ailments. Additionally, the infrastructure necessary for
telehealth, including broadband Internet, is lacking in rural areas and
expensive to set up, so steps should be taken to ensure that telephones
and cell phones are able to be used where broadband access is
impractical.
Question. In an attempt to curb or reverse price increases, Speaker
Pelosi's drug pricing bill would impose steep penalties for
prescription drug price growth that exceeds general inflation.
How do you anticipate policies along these lines might impact the
launch prices for new products coming to market, and what do you see as
some of the tradeoffs that this approach might necessitate?
Answer. The primary flaw in efforts to restrict price increases to
no more than the rate of inflation is that they do not work in the long
run. Instead, policies that limit the ability of a company to increase
prices over time simply result in increases in the initial list price
of medications when they first come to market. Such anti-market
policies are punitive in nature, aimed more at punishing pharmaceutical
companies for high prices than at meaningfully addressing health-care
costs. The problem with seeking to punish drug companies for high
prices is that in most cases the effects of these policies will simply
lead to higher launch prices Nationwide and ultimately negatively
impact American patients most of all.
Question. Historically, what types of unintended consequences have
resulted from government-imposed price controls?
Answer. Historically, price increases have been largely correlated
with the imposition or expansion of mandatory rebates and taxes. Drug
manufacturers who have their drug covered by Medicaid are required by
law to offer Medicaid the ``best price'' available to any other payer
or provide a fixed rebate and the ACA extended this requirement in
expansion States and to Medicaid managed care organizations, thus drug
manufacturers became obligated to provide their drugs for roughly
three-quarters of the price to nearly a quarter of the U.S. population.
The result was predictable: a sharp increase in the value of
manufacturers' rebates. In FY 2010, Medicaid drug rebates equaled 42
percent of gross Medicaid drug costs. Following the ACA's changes,
rebates grew each year as a percentage of expenditures, and by FY 2013,
Medicaid rebates equaled nearly 63 percent of the program's gross drug
costs. Ultimately, these costs get passed to consumers in the form of
higher list prices.
Question. On August 31, 2021--following a 5-month delay relative to
the statutory reporting deadline of April 1st--the Medicare trustees
issued their annual report on the financial status of the program. The
trustees warn that the Medicare hospital insurance, or HI trust fund,
will be bankrupt in 2026, at which time the program will no longer be
able to pay full benefits for seniors and the disabled.
While the trustees predict that the HI trust fund will be depleted
in 2026, there is substantial uncertainty behind their forecast.
Current projections, for example, show a year-end HI surplus for the
year 2025 that is only $27.4 billion. Given historic annual Medicare
spending, that is an exceptionally low reserve amount.
It is, therefore, unclear whether the Medicare HI trust fund could
remain solvent through the entirety of 2025.
Given these dire fiscal warnings, do you believe that Congress
should be focused on preserving and protecting the Medicare program's
long-term solvency if we want to keep the promises that we have made
both to current beneficiaries and to Americans who are near retirement
age?
Answer. Yes. Medicare is quickly running out of money to cover
program costs and continuing with the Medicare status quo is
unacceptable. Medicare's annual cash shortfall in 2020 represented
almost 16 percent of the Federal deficit that year. Since 1965,
Medicare's cumulative cash shortfall amounts to $5.95 trillion, and
year-over-year Medicare shortfalls are now responsible for nearly one-
third of national debt. Balancing Medicare's annual cash shortfalls
under the existing system would prove devastating to seniors and
require significant increases in annual Medicare payroll taxes and
Medicare Parts B and D premiums. More specifically, to balance the 2020
Medicare Part A cash deficit, Medicare payroll taxes would need to
increase 32.6 percent, from 1.45 percent to 1.9 percent. To balance the
$307 billion deficit for Medicare Part B in 2020, seniors' premiums for
physicians would need to increase by 276 percent, raising the average
annual premium from $1,782 to $6531. To balance the Part D cash deficit
of $89.2 billion in 2020, seniors' premiums for prescription drugs
would need to increase by 565 percent, bringing the average annual drug
premium from $392 to $2,610. With such unprecedented levels of cash
shortfalls continuing through the budget horizon, maintaining the
status quo ensures that Medicare will soon not exist for today's
seniors, let alone future generations of Americans. These rising costs
and the measures necessary to cover them will increasingly harm seniors
if Medicare reform is not undertaken.
Question. Congress has historically looked to reform and adjust
Medicare payments to providers in order to extend the life of the HI
trust fund. However, the last time Congress enacted significant
Medicare savings, the money was used to finance spending on Obamacare.
I remember when Obamacare was pushed through Congress without a
single Republican vote. That law raided over $700 billion from a
financially strapped Medicare program and spent it. Those savings are
no longer available to help us preserve and protect the Medicare
program.
Now here we are, more than a decade later, in a very similar
situation.
If current proposals are enacted, hundreds of billions in Medicare
savings will be spent at a time when the HI trust fund is projected to
be insolvent in approximately 4 short years.
In your opinion, should Congress instead be focused on making sure
that current Medicare benefits remain available and accessible to
beneficiaries?
Answer. The 2021 trustees report provides a sense of what the
future may look like should Medicare continue to remain unchanged.
Sooner or later Medicare reform is inevitable, but progressive efforts
to lower the Medicare eligibility age and add coverage for vision,
hearing, and dental would only accelerate the program's collapse. The
Obama administration oversaw a $2.4-trillion cash shortfall over 8
years (2009-2016), while the Trump administration oversaw its own $1.6-
trillion Medicare cash shortfall during the past presidential term. The
trustees project that by the end of 2021 the Biden administration will
have overseen a $446-billion cash shortfall in its first year in
office. The fiscal reality is that continuing the previous two
administrations' Medicare policies and leaving Medicare unchanged all
but guarantees bankruptcy. In 2026, the HI fund will only cover about
91 percent of its bills, and that gap will only grow larger in the
years that follow as the population ages.
______
Questions Submitted by Hon. John Cornyn
price controls, biopharmaceutical leadership, and china
Question. For over a decade, the Chinese Government has targeted
biopharmaceuticals as a key industry for development. The State Council
has called on all levels of government to support expansions in
research, development, and manufacturing capacity.
At the same time, Democrats are pushing for draconian price
controls that threatened to slash U.S. biopharmaceutical research and
development by as much as 60 percent and cut new drug approvals over
the next 2 decades by as many as 342.\1\
---------------------------------------------------------------------------
\1\ https://cpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/d/3128/
files/2021/08/Issue-Brief-Price-Controls-and-Drug-Innovation-Sep-
23.pdf.
Could you elaborate on the impact these price control proposals
would have on the United States' leadership in the discovery,
---------------------------------------------------------------------------
development, and delivery of new biopharmaceutical products?
Answer. The competitive, market-based approach to pharmaceuticals
in the United States has allowed access to new and innovative therapies
and medicines that have been unavailable in other developed countries
as politicians abroad have been willing to forego access to innovative
treatments in order to limit health-care costs. For example, the 14
reference countries included in the Trump administration's
International Price Index proposal have significantly restricted access
to treatments and reduced pharmaceutical innovation, compared to the
United States. When adjusting for population, the 14 countries had
access to only 51.5 percent of the 290 new drugs developed in the past
8 years and it took an average of 16 months after their initial global
launch for the drugs to become available. In contrast, the United
States gained access to 89 percent of the 290 new medicines within
three months. Looking at cancer drugs specifically, 59.7 percent of the
82 new cancer drugs between 2017 and 2017 were available within 17.4
months in the 14 reference countries, compared to 96 percent of new
cancer medicines available within three months in the United States.
drug pricing
Question. The Democrats' drug pricing plan establishes an excise
tax of up to 95 percent of the gross sales of a drug if the
manufacturer does not negotiate or fails to reach an agreement on
price. It seems to me this is more of a price control than since it is
such a punitive measure.
Are you aware of a 95-percent excise tax anywhere else in U.S. law?
Answer. No, I am not.
Question. How might a policy like this impact the biopharmaceutical
development?
Would you expect it to have any impact on the industry's ability to
respond to the next world pandemic?
Answer. The United States has persisted as a global leader in
biotech and biopharmaceutical development for years thanks to market-
based functions of research and development, yet such a policy would
effectively allow the government to dictate the price that a company
may charge for a drug and immediately halt funding of drug discovery
and development. Manufacturers depend on investment capital, and
Federal policies that dramatically curtail return on investment will
have a detrimental effect on manufacturer's ability to attract the
capital necessary to continue bringing new treatments to market.
Investors and venture capital firms will stop investing in new
therapies and will give up on medicines that have not yet been
invented.
The market-based system in the United States allowed flexibility to
respond to emerging threats of the COVID-19 pandemic in real-time.
Without public-private partnerships and substantial amounts of funding
invested in the biopharmaceutical industry in the early stages of the
COVID-19 pandemic, it would have been far more challenging, if not
impossible, to achieve the rapid and remarkable success we have seen
for the development of innovative vaccines and treatments. Policies in
the Build Back Better proposal claim to limit drug spending through
restrictive government price controls, ultimately deciding that lower
spending is more important than access to the range of innovative new
drugs. Letting the government decide that Americans should not have
access to new, innovative treatments in a timely manner because the
value of those treatments is not worth the cost to taxpayers or private
payers, would surely inhibit the country's ability to respond to the
next pandemic.
biosimilars
Question. Biosimilars represent an opportunity to save billions of
dollars in the cost of prescription drugs. Despite this great
potential, the market is still lacking.
What policies do you think may be necessary to ensure a more robust
biosimilars market?
Answer. History has proven the best way to reduce the price of a
good for which there is growing demand is to increase its supply
through competition. For drug pricing, that means bringing generics and
biosimilars to market to compete with brand-name drugs. There are
ongoing measures within the FDA that promote the approval and market
entry of lower-cost drug options, including the Biosimilars Action Plan
from 2018 for biosimilars and the Drug Competition Action Plan for
generic drugs. The FDA is updating previous guidelines on the use of
biosimilars to account for modernized technologies and is exploring the
use of labeling carve-outs and provisions in the CREATES Act to
increase supply of biosimilars and generics in the drug market and
increase access to product samples.
Question. One idea to help unlock the potential savings of
biosimilars is implementing a shared savings program where Medicare
savings associated with prescribing a biosimilar would be shared with
providers and ultimately lowering Medicare costs, and more importantly
patients through reduced co-pays. Senator Bennet and I have introduced
a bill that would create a shared savings program.
What do you think of this approach?
Answer. It looks promising.
Question. Many times you have argued that one of the best ways to
bring down drug prices is to interject competition through generic
drugs and biosimilars.
What should Congress be doing to bolster a biosimilars market where
we are seeing lots of biosimilars approved, but uptake is lagging
behind?
Answer. Instead of setting price controls that will stifle
pharmaceutical innovation and further limit the creation of
biosimilars, Congress should seek to reduce drug costs by increasing
the utilization of biosimilars over higher-cost alternatives, by
increasing patient and provider awareness of biosimilars and their
associated benefits, as well as incentivizing providers to prescribe
biosimilars through temporary reimbursement increases, both of which
have historically garnered bipartisan support.
Question. Are there market forces making it difficult for
biosimilars to achieve market share?
Answer. Biologics and biosimilars often treat rare diseases and are
some of the most expensive drugs due to high development costs and a
limited pool of potential users. Market share is further hindered by
the complex approval process, which sometimes takes as long as 10
years, and difficulty in proving a biosimilar drug's similarity to the
reference biologic. Several additional factors that have slowed market
growth of biosimilars include regulatory uncertainties, low demand from
physicians and payers, and extensive patent litigation.
______
Questions Submitted by Hon. Tim Scott
Question. Last week, the Bureau of Labor and Statistics released
their Job Openings and Labor Turnover Summary indicating that Americans
are quitting their jobs in record numbers. Additionally, the Bureau's
September jobs report revealed weak employment numbers and slowing job
growth. With higher-income individuals now eligible to receive ACA
government subsidies due to the pandemic and proposals to make this
permanent, I am concerned that this could lure individuals away from
employer-based coverage, driving up employee premiums and undermining
group coverage--especially if those drawn away are younger, healthier
employees.
Given the concerning economic indicators we have seen, could the
devaluing of employer-sponsored health care be another barrier for job
creators, especially small businesses, to attract and retain talent?
Answer. More people leaving employer-based coverage may lead to
higher premiums, but this heavily depends on the type of people
leaving. Higher income levels of eligibility may be more likely to
remove health insurance as a variable all together when an individual
looks for work, rather than actively disadvantage job creators.
Employer-sponsored health insurance is a financial burden on companies.
Given a choice, employers might prefer to re-invest the money formerly
spent on employees who left the company insurance into other benefits,
such as higher salaries, bonuses, or retirement benefits in order to
retain talent. As such, it may be a wash for companies when it comes to
available resources to attract talent.
Question. According to a recent Kaiser Family Foundation report,
out-of-pocket costs for Medicare enrollees ``can run into the hundreds
and even thousands of dollars for expensive dental treatment, hearing
aids, or corrective eyewear'' harming their retirement security.
Private Medicare Advantage plans today offer hearing, dental, and
vision services at little or no additional cost to enrollees and
without putting the American taxpayer on the hook for these additional
services.
How is that? Is the key here mandated benefits or flexibility and
competition--in other words, one-size-fits-all versus the free-market?
Could we not just build on these high-performing, lower-cost
private Medicare Advantage plans instead of cutting them to fund an
expensive one-size-fits-all government expansion which would negatively
impact nearly a third of Medicare patients in South Carolina during a
pandemic?
Answer. Medicare Advantage (MA) offers beneficiaries plans managed
by private insurers, as opposed to the traditional, one-size-fits-all
Medicare fee-for-service (FFS) plans administered by the Federal
Government. MA uses the power of competition to control costs and
provide beneficiaries with expanded choices of plans and comprehensive
coverage options. The average MA enrollee chooses from 33 plans offered
by 8 issuers in their geographic area, and average premiums for MA
plans have continuously decreased since 2015, with average premiums at
$21 per month in 2021. MA beneficiaries spend 40 percent less on out-
of-pocket costs compared to FFS beneficiaries, and many MA enrollees
have access to $0 premiums. In 2020, roughly 60 percent of MA enrollees
paid no premium.
The flexibility of the private market allows MA plans to offer more
comprehensive benefits than FFS Medicare. Starting in 2017, MA plans
began offering primarily health-related benefits, such as vision,
dental, and hearing benefits, and in 2020, plans were allowed to offer
non-primarily health-related benefits to those with chronic conditions.
As of this month, 90 percent of MA enrollees are covered by a MA plan
with Part D coverage (MA-PD plan), and as of this year, 98 percent of
MA-PD plans covered vision care, 93 percent covered hearing benefits,
and 87 percent covered dental services. MA plans currently cover 42
percent of the Medicare population, and that number is projected to
increase to 51 percent by the end of the decade. As MA's popularity
continues to grow, advocates for enhanced Medicare coverage should
focus on bolstering MA, which already provides a range of tailored
benefits to the Medicare population.
Question. As ranking member of the Special Committee on Aging, I
recently released a report titled ``Putting Patients First: Innovative
Solutions for Prescription Drugs and Older Americans'' examining how
government-mandated drug prices would stifle medical innovation, erode
consumer choice, and restrict access to lifesaving drugs for many
patients.
What does the proposal to use government price-setting based on the
VA mean for patient care decisions in Medicare (whether based on a
domestic price or international reference price)?
Answer. It means Medicare beneficiaries will have less access to
medications that will be excluded from the formulary and will either
have to use less-optimal treatments or go without.
Question. The latest Medicare trustees report projects that the
hospital trust fund will run dry in 2026. Additionally, I am
increasingly hearing from worried Medicare providers regarding the
financial uncertainty currently facing the Medicare physician payment
system. As Medicare Open Enrollment began this week, I believe we ought
to be focused on strengthening this vital program for current and
future enrollees instead of exacerbating its challenges by hastily
expanding it.
What is the cost to the American taxpayer of lowering Medicare's
eligibility age to 60?
Answer. Modeling from AAF's Center for Health and Economy shows
that if Medicare eligibility were extended to those age 60-64, an
additional 3.9 million Americans would be insured at a cost to the
Federal taxpayer between $379.6 billion and $1.8 trillion over 10
years, depending on employer behavior in response to the change.\2\
---------------------------------------------------------------------------
\2\ https://www.americanactionforum.org/research/lowering-the-
medicare-age-to-60-cost-and-coverage-outcomes/.
Question. We are seeing tremendous progress with therapeutic and
technological innovations that could soon cure diseases such as Sickle
---------------------------------------------------------------------------
Cell Disease.
As the science outpaces policy, how can reimbursement arrangements
and public programs evolve to ensure immediate patient access for one-
time curative treatments?
Answer. Programs need to be given the adequate regulatory
flexibility to quickly adapt to and provide access to new technologies.
This includes reducing red tape, as well as ensuring stakeholders have
direct lines of communication to the agencies that oversee these
programs.
______
Questions Submitted by Hon. James Lankford
Question. The Affordable Care Act allows taxpayer funding for
abortion on demand, but at the very least it acknowledged the right of
States to prohibit abortion coverage on the exchanges and that abortion
could not be required as an essential health benefit. Eleven of the 12
States that have chosen not expand Medicaid have also chosen to
prohibit abortion coverage on the exchanges. As written, the Democrats'
reconciliation proposal would override these State laws and mandate
coverage of, and funding for, abortions on demand, and transportation
services to acquire them, for those under 138 percent of poverty and
without cost sharing in 2024. However, the bill refers to abortions in
an underhanded way.
Do you agree that abortion coverage is mandated and funded by the
proposed reconciliation bill's reference to family planning services
``which are not otherwise provided under such plan as part of the
essential health benefits package'' (subsection (c) of section 137505)?
Answer. Yes.
Question. As you know, one of the successes in Medicare Part D over
the years has been the ability for plans to drive generic utilization,
which provides savings for beneficiaries and the health system and
taxpayer. However, the current structure of Part D has shifted to
incentivize plans to favor rebates over lower-priced generic and
biosimilar alternatives. As a result, we have seen the number of
generics placed on the lowest-cost sharing tier drop dramatically in
recent years. I'm concerned about this trend and working on legislation
that would address this problem.
Can you provide more details on the importance of generic/
biosimilar access in Part D and how this can meaningfully lower out-of-
pocket costs for seniors?
Answer. Generics and biosimilars benefit patients and the health-
care system by introducing competition for high-priced drugs. In 2018,
generic drugs accounted for 22 percent of all drug spending despite the
fact that 90 percent of dispensed prescriptions were generic drugs.
Additionally, the average co-pay of a generic prescription ($5.63) is
nearly one-seventh that of a brand-name prescription ($40.65), offering
significant savings potential for patients.\3\ Markets for generic
drugs are competitive and generic entry inherently increases the number
of competitors in the market, which drives significant price reductions
for brand name drugs compared to the original price prior to generic
entry. However, given the competing financial incentives for insurers
and manufacturers to cover biosimilar drugs under the current structure
of Part D, future reforms should seek to ensure biosimilars are less
costly for all involved stakeholders to encourage competition and
utilization in the long run.
---------------------------------------------------------------------------
\3\ https://accessiblemeds.org/sites/default/files/2019-09/AAM-
2019-Generic-Biosimilars-Access-and-Savings-US-Report-WEB.pdf.
Question. While every member of Congress argues for increased
access to quality health care, the Biden administration's new mandates
that ban providers from participating in both Medicare and Medicaid
unless their staff is fully vaccinated, will decrease the number of
available Medicare and Medicaid providers. While we are still waiting
to see the interim final rule from CMS on this requirement, many
---------------------------------------------------------------------------
providers in my State have severe concerns.
Have you seen preliminary estimates on how many providers will lose
their provider numbers or, on the contrary, how many trained
professional care givers will be forced out of the market because of
this mandate?
Answer. The Biden administration estimates the vaccine mandate will
``cover approximately 17 million health-care workers across 76,000
health-care facilities.''\4\ A preliminary study from the COVID States
Project (a joint research project of Northeastern University, Harvard
University, Rutgers University, and Northwestern University) estimated
that in July 2021, 73 percent of health-care workers were vaccinated,
27 percent were unvaccinated, and 15 percent of were vaccine resistant,
based on a response that they ``would not get the COVID vaccine if/when
it is available to them.\5\ Based on more recent estimates, it appears
that health systems across the country are losing anywhere from 0.5
percent to 10 percent of their health-care workers due to COVID-19
vaccine mandates.\6\
---------------------------------------------------------------------------
\4\ https://www.whitehouse.gov/briefing-room/press-briefings/2021/
11/04/background-press-call-on-osha-and-cms-rules-for-vaccination-in-
the-workplace/.
\5\ http://news.northeastern.edu/uploads/
COVID19%20CONSORTIUM%20REPORT%2062%20
HCW%20August%202021.pdf.
\6\ https://www.fiercehealthcare.com/hospitals/how-many-employees-
have-hospitals-lost-to-vaccine-mandates-numbers-so-far.
______
Questions Submitted by Hon. Todd Young
Question. Over half of American workers are saving for retirement
via a workplace retirement plan,\7\ and the vast majority of those
savers earn less than 400,000 dollars per year.\8\
---------------------------------------------------------------------------
\7\ http://www.pensionrights.org/publications/statistic/how-many-
american-workers-participate-workplace-retirement-plans.
\8\ https://www.bls.gov/ncs/ebs/benefits/2018/ownership/civilian/
table02a.htm.
Can you please explain how increasing corporate tax rates,
resulting in reduced corporate profits and returns, can negatively
---------------------------------------------------------------------------
impact Americans' retirement savings?
Answer. There are two main channels for negative impacts. First,
the proposed corporate changes will reduce the future labor earnings of
workers by reducing productivity growth, reducing real wage growth, and
driving corporations overseas. Thus, workers will have fewer resource
out of which to save for retirement. Second, higher corporate taxes
will reduce the return to pension funds and the retirement earnings of
individuals. This lowers the accumulated funds available to fund
retirement needs.
Question. In your view, will increasing the corporate tax
negatively impact American workers?
Answer. Yes.
Question. Professor Larry Summers, the former U.S. Secretary of the
Treasury under President Clinton, the former Director of the National
Economic Council under President Obama, and the Charles W. Eliot
University Professor at Harvard, issued the following series of tweets
on October 25, 2021:
Yesterday on @CNN w @jaketapper, @SecYellen said I was wrong
about my assertion we are more at risks of losing control of
inflation than at any time in my career. She expressed
confidence that inflation is decelerating and will be back to
target levels by the end of next year. I hope she is right but
I think it's much less than a 50/50 chance. When the
administration formulated its budget in February, it expected 2
percent inflation in 2021, I was warning about inflation. Their
forecast is no longer operative. In May and June, @SecYellen
expressed confidence that inflation would be back to the 2
percent range by late 2021 or early 2022. Now this forecast is
no longer operative. In @CNN interview, @SecYellen asserts
twice that inflation has decelerated. This is a bit misleading
as the 3 month and 12 month CPI inflation rates are both around
5 percent on an annual basis. And the trimmed mean and median
inflation rates that exclude aberrant sectors (which used to be
a stable of administration's rhetoric) are now accelerating.
The TIPS market is suggesting inflation in 3 percent range over
5 years and more next year. Breakeven inflation over 5 years is
up 40 bps in the last month. Expectations data are even more
disturbing. This is part of why my alarm is increasing and
Treasury should be as well. Given lags in indices, housing
inflation is almost certain to soar in coming months. With
super tight labor markets, rising strike activity and real
wages having declined, increases in wage inflation are likely
as well. I actually believe the gap between Treasury and Fed
statements and the everyday experience of business and
consumers in terms of inflation has widened in recent months.
Until the Fed and Treasury fully recognize the inflation
reality, they are unlikely to deal with it successfully.\9\
---------------------------------------------------------------------------
\9\ https://twitter.com/LHSummers/status/1452698999656534018.
Question. Do you agree with Professor Summers' analysis and
---------------------------------------------------------------------------
conclusions as set forth above?
Answer. I believe he has been unusually prescient in his concerns
over inflation stemming from the American Rescue Plan and continued
quantitative easing by the Federal Reserve. I share his concerns.
Question. How does the Democrats' proposed $3.5-trillion spending
plan ensure that this rapid inflation will only continue?
Answer. The $1.9-trillion American Rescue Plan was passed at a time
when the economy was growing at a 6.0 to 6.5 percent annual rate--poor
timing--was far larger than the roughly $500-billion output gap--
inappropriately large--and had all sorts of unrelated measures--
bailouts of the multiemployer pension system are evidence of a poor
design. The current reconciliation bill is heavily front-loaded in its
spending and back-loaded in its pay-fors. It promises a repeat of the
ARP policy error in the near-term and a dramatic rise in fiscal
imbalances in the long term.
Question. What can Congress do (or refrain from doing) to prevent
Professor Summers' forecast regarding the future inflation rate?
Answer. First, do no harm. Do not repeat the policy error and let
the Fed get inflation under control.
Question. On October 16, 2021, when asked by CNN's Jake Tapper
whether it sounded tone deaf to suggest that rising prices and empty
grocery store shelves are ``high-class problems,'' White House Press
Secretary Jen Psaki responded, ``A year ago, people were in their
homes, 10 percent of people were unemployed, gas prices were low
because nobody was driving, people weren't buying goods because they
didn't have jobs. Now more people have jobs, more people are buying
goods, that's increasing the demand. That's a good thing. At the same
time, we also know that the supply is low because we're coming out of
the pandemic. And because a bunch of manufacturing sectors across the
world have shut down because ports haven't been functioning as they
should be. These are all things we're working through. What people
should know is that inflation will come down next year. Economists have
said that. They're all projecting that.''\10\
---------------------------------------------------------------------------
\10\ https://www.cnn.com/videos/politics/2021/10/15/jen-psaki-ron-
klain-inflation-retweet-tapper-lead-vpx.cnn.
Do you agree with the White House's explanation for the
---------------------------------------------------------------------------
inflationary environment America is currently facing? Why or why not?
Answer. I do not. The aspects of the recovery that she emphasizes
were accomplished by bipartisan legislation in March and December 2020,
as well as successful deployment of the vaccines. The legislation
passed in 2021--the ARP--has done more harm than good by fueling
inflation. It is true that there are supply-chain constraints, but
supply is only meaningfully measured relative to demand, and the ARP
excessively stimulated demand.
______
Questions Submitted by Hon. John Barrasso
Question. Before coming to the Senate, I practiced medicine in
Casper, WY for over 2 decades. At the medical practice where I worked,
we cared for any patient that came through the door. It made no
difference if the patient had private insurance, Medicare, Medicaid, or
no coverage. We cared for everyone.
Medicare is a vitally important program for seniors in Wyoming and
across the country. We must ensure Medicare can continue to meet the
health-care needs of our Nation's seniors.
Right now, Democrats are proposing to add dental, vision, and
hearing benefits to traditional Medicare.
Can you discuss how seniors can currently receive these benefits?
In particular, can you focus on their access through Medicare
Advantage?
Answer. Medicare Advantage (MA) allows beneficiaries to enroll in
plans managed by private insurers, and 89 percent of MA plans also
include Part D coverage (MA-PD plans). Starting in 2017, MA plans began
offering ``primarily health-related'' benefits, including vision,
dental, and hearing. In 2019, plans were allowed to expand those
supplemental benefits to cover things such as transportation, meal
service, and adult day care, as well as disease-tailored benefits to
enrollees with specific medical conditions. Beginning in 2020, plans
started offering ``non-primarily health-related'' benefits--for
example, pest control services and air purifiers--for enrollees with
chronic diseases. In 2020, 98 percent of MA-PD plans covered vision
care, 93 percent provided hearing benefits, and 87 percent covered
dental services. Additionally, 95 percent of MA-PD plans offered
fitness benefits such as gym memberships, and 68 percent offered
coverage for over-the-counter items such as sunscreen and first aid
supplies.
Question. Can you discuss ways Congress could improve Medicare
Advantage so more seniors could gain access to these plans?
Answer. Virtually all Medicare beneficiaries (99.7 percent) will
have access to at least one MA plan in 2022, varying between 99.9
percent of beneficiaries in metropolitan areas and 98.4 percent of
beneficiaries in non-metropolitan areas.\11\ MA offers a consumer-
driven and value-based model that encourages competition between plans
and leads to expanded supplemental benefits and improved quality
measures, and currently, 94 percent of seniors in MA plans are
satisfied with the quality of care received.\12\ Enrollment in MA is
projected to reach 29.5 million people in 2022, up from 26.9 million in
2021, and average monthly premiums are predicted to decrease to $19 per
month in 2022, down from $21 in 2021.\13\ As the size of the MA market
continues to grow, MA enrollment is likely to surpass FFS enrollment
and has the potential to become the leading source of coverage for
seniors.
---------------------------------------------------------------------------
\11\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
2022-spotlight-first-look/.
\12\ https://bettermedicarealliance.org/publication/future-of-
medicare-factsheet/.
\13\ https://www.cms.gov/newsroom/press-releases/cms-releases-2022-
premiums-and-cost-sharing-information-medicare-advantage-and-
prescription-drug.
Question. According to the Congressional Budget Office (CBO),
making the increased premium tax credits permanent would cost $259
billion over 10 years. CBO estimates that over half (65 percent) of
those benefiting from the provision have incomes above 400 percent of
the Federal poverty level (FPL). CBO goes on to say that 20 percent
will have incomes above 600 percent percent of FPL and 10 percent will
---------------------------------------------------------------------------
be over 700 percent.
Do you think these subsidies are properly designed to lower health-
care costs and help the neediest families?
Answer. No. Removing the cap on eligibility for subsidies benefits
only higher-
income individuals, while expanding the generosity helps all income
levels somewhat. The net impact is largely a benefit to the more
affluent.
Question. As a doctor, I have seen firsthand the dramatic
improvements in medical care over the last 30 years. Thanks to American
innovation, patients are living longer and healthier lives.
Making sure seniors can continue to access cutting edge therapies
should be the focus of prescription drug reforms. I am concerned
current policies within Medicare Part D do not allow patients to
receive the full benefit of the discounts that are already negotiated
under Part D.
Can you please discuss policies you believe would lower the cost of
prescription drugs at the pharmacy counter?
In particular, can you focus on policies that would allow seniors
to more directly benefit from the discounts already negotiated under
Part D?
Answer. The current structure of Medicare Part D's benefit design,
along with pricing incentives in the broader pharmaceutical market,
create perverse incentives for insurers and drug manufacturers to
benefit from high-cost drugs, which have resulted in a rapid increase
in spending in the catastrophic phase of the Part D program over the
past decade, exposing taxpayers and high-cost beneficiaries to ever-
increasing costs. Under current law, the mandatory discount decreases
(as a proportion of the drug's price) as the price increases. To
counter this undesirable effect, policies should instead require
manufacturer rebates in the catastrophic phase, ensuring the mandatory
discount increases along with a drug's price, and increase insurer
liability in the catastrophic phase to put downward pressure on drug
prices. Reforms should also establish an out-of-pocket (OOP) maximum
for beneficiaries and reduce the government's open-ended insurance
liability, providing greater protection to beneficiaries and taxpayers.
Several bills introduced in Congress as well as a proposal introduced
by AAF \14\ have included these four necessary components--requiring
manufacturer liability to increase along with a drug's price,
decreasing the government's reinsurance liability, increasing insurer
liability, and capping beneficiary OOP spending--to reform the Medicare
Part D benefit structure, but slight differences in details lead to
significant variations in their impact.\15\
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\14\ https://www.americanactionforum.org/research/redesigning-
medicare-part-d-realign-incentives-1/.
\15\ https://www.americanactionforum.org/insight/analysis-of-the-
competing-proposals-to-reform-medicare-part-d/.
Question. On October 19th, the Congressional Budget Office was able
to provide preliminary cost information regarding the reconciliation
bill. Since this legislation is still being drafted, there remain many
---------------------------------------------------------------------------
unanswered questions.
Importantly, CBO was able to provide information regarding the cost
and number of individuals who might gain health insurance under the
reconciliation legislation.
According to CBO, the Democrats are spending over $550 billion
dollars over 10 years on provisions meant to lower the number of
uninsured individuals.
The result? According to CBO, 85 percent of the people uninsured
now will remain uninsured under the Democratic proposal. Specifically,
in 2031, over 20 million Americans will remain uninsured under this
Democratic proposal.
Do you believe spending over $550 billion dollars to cover about 4
million people over 10 years is a good use of taxpayer money?
Answer. To provide some context, that is roughly $13,750 a year.
The average cost for a family of four over a year is roughly $13,824 a
year. For an individual, the average cost is over $5,500. This
legislation is certainly not the most efficient way to spend taxpayer
money to provide health coverage.
Question. Do you think there are better ways to spend $500 billion
to lower the cost of health care?
Answer. We could get rid of the taxes on all of the various inputs
for health care so that the underlying cost is reduced.
Question. President Biden has claimed the cost of his multi-
trillion-dollar reconciliation bill is actually zero dollars.
Folks in Wyoming have a hard time understanding how legislation
that was reported to cost upwards of $3.5 trillion one day can
magically cost zero the next.
As the former director of the non-partisan Congressional Budget
Office (CBO), can you please explain how President Biden could make
sure a claim?
Answer. I cannot. The Senate should ask the White House to explain
the claim.
Question. Do you believe such a claim is accurate?
Answer. Absolutely not. Most estimates put the price tag at $5.5 to
$6 trillion if all the spending programs are made permanent, and the
revenue raised at $2 trillion. There are no zero-dollar outcomes here.
______
Prepared Statement of Frederick Isasi, J.D., MPH,
Executive Director, Families USA
introduction
Chairman Wyden, Ranking Member Crapo, members of the committee,
thank you for the opportunity to testify today. My name is Frederick
Isasi, and I am the executive director of Families USA, a leading
national, non-partisan voice for health-care consumers. For more than
40 years, Families USA has been dedicated to achieving high-quality,
affordable health care and improved health for all.
It is an honor to be with you this morning. Thanks to extraordinary
leadership by members of this committee, as well as your colleagues
elsewhere in government, American families have experienced major gains
in health coverage during the past decade. But as we all know, our work
is not yet done. On behalf of Families USA, I urge you to seize every
opportunity to legislate and continue our work to finally make sure
that everyone in America can get the affordable health care they need
to thrive.
recent history of health insurance in america
As the 21st century dawned, the state of American health insurance
was increasingly grim, with the number of people who had no health
coverage steadily rising, year after year.\1\ America's leaders finally
turned the tide in 2010 by passing the Affordable Care Act. From 2010
through 2016, 20 million people gained health insurance,\2\ many for
the first time in their lives.
---------------------------------------------------------------------------
\1\ U.S. Census Bureau, Current Population Survey, Annual Social
and Economic Supplements. ``Table HIB-1. Health Insurance Coverage
Status and Type of Coverage by Sex, Race and Hispanic Origin: 1999 to
2012,'' https://www2.census.gov/programs-surveys/demo/tables/health-
insurance/time-series/hib/hihistt1b.xls.
\2\ U.S. Census Bureau, 2008 to 2019 American Community Surveys
(ACS). ``Table HIC-9_ACS. Population Without Health Insurance Coverage
by Race and Hispanic Origin: 2008 to 2019,'' https://www2.census.gov/
programs-surveys/demo/tables/health-insurance/time-series/acs/hic
09_acs.xlsx.
To be sure, the individual market still had problems after passage
of the ACA, with too many people charged premiums and deductibles they
couldn't afford. But the ACA took a terrible individual market and made
it much, much better. For example, national surveys taken both before
and after the law took full effect showed that people buying their own
insurance experienced dramatic overall improvements:\3\
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\3\ Sara R. Collins, Munira Z. Gunja, Michelle M. Doty, and Sophie
Beutel. ``How the Affordable Care Act Has Improved Americans' Ability
to Buy Health Insurance on Their Own'' (New York, NY; The Commonwealth
Fund, February 1, 2017), https://www.commonwealthfund.org/publications/
issue-briefs/2017/feb/how-affordable-care-act-has-improved-americans-
ability-buy.
Before the ACA, 60 percent of consumers trying to buy
insurance in the individual market reported that it was ``very
difficult or impossible to find affordable insurance.'' The ACA cut
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that proportion to 34 percent.
More than two out of five (43 percent) consumers trying to buy
individual insurance before the ACA said that it was ``very difficult
or impossible to find the coverage they needed.'' After the ACA, just
one in four (25 percent) experienced this problem.
Altogether, just 46 percent of those who tried to buy
individual coverage before the ACA wound up actually purchasing
insurance. By contrast, two-thirds (66 percent) of people exploring the
ACA's individual market bought coverage.
The ACA also prohibited insurance companies from discriminating
against people with preexisting conditions; guaranteed essential
preventive care, free from copayments and deductibles, to hundreds of
millions of Americans who get health care on the job; and slashed
prescription drug costs for millions of senior citizens as the infamous
Medicare ``prescription drug donut hole'' shrank, then closed. Put
simply, the Affordable Care Act provided the greatest advance in
American health coverage since President Johnson signed Medicare and
Medicaid into law in July 1965.
Starting in 2017, however, health coverage in America changed
course. Trump administration policies led to reduced enrollment in
Medicaid and marketplace coverage as Federal officials decimated
funding for outreach and enrollment assistance and promoted the sale of
so-called ``junk'' insurance plans that let insurance companies
discriminate against people with preexisting conditions. The number of
people without health insurance once again began rising, growing from
27 million in 2016 to nearly 30 million in 2019.\4\ In a particularly
shocking development, the number of children without any health
insurance whatsoever rose for the first time since Congress, on a
bipartisan basis, passed the Children's Health Insurance Program in
1997, 2 decades earlier.\5\
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\4\ U.S. Census Bureau, 2008 to 2019 ACS, Table HIC-9_ACS.
\5\ For estimates from 1997 through 2015, see Brian W. Ward, Tainya
C. Clarke, Colleen N. Nugent, and Jeannine S. Schiller. ``Early Release
of Selected Estimates Based on Data from the 2015 National Health
Interview Survey.'' National Health Interview Survey Early Release
Program. National Center for Health Statistics. May 2016, https://
www.cdc.gov/nchs/data/nhis/earlyrelease/earlyrelease201605.pdf. For
estimates from 2008 to 2019, see U.S. Census Bureau, 2008 to 2019
American Community Survey (ACS), ``Table HIC-5_ACS. Health Insurance
Coverage Status and Type of Coverage by State--Children Under 19: 2008
to 2019,'' https://www2.census.gov/programs-surveys/demo/tables/health-
insurance/time-series/acs/hic05_acs.
xlsx.
These insurance losses proved still more tragic in 2020, when the
worst pandemic of deadly disease in more than a century and the
steepest economic drop since the 1929 stock market crash devastated our
country. As millions of workers lost their jobs, the number of people
receiving health coverage from their employers fell by nearly 6
million--one of the largest losses in history.\6\ The fallout would
have been far worse, but thanks to Medicaid and health insurance
marketplaces, 70 percent of people who lost employer-sponsored
insurance were able to obtain other forms of coverage.\7\ All told, the
number of uninsured still rose by 1.8 million people in 2020. Notably,
the only statistically significant increases in the number of uninsured
people reported by the Census Bureau took place in States that had not
extended Medicaid coverage as Congress authorized in 2010 \8\--a
problem Congress can and should fix, as I'll explain in a few moments.
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\6\ From 2019 to 2020, the number of people with employer-sponsored
insurance fell by 5.8 million, according to Census Bureau estimates
based on the Current Population Survey (CPS). Katherine Keisler-Starkey
and Lisa N. Bunch. ``Health Insurance Coverage in the United States:
2020.'' Current Population Reports, P60-274. U.S. Census Bureau,
September 2021, https://www.census.gov/library/publications/2021/demo/
p60-274.html.
\7\ The Census Bureau's CPS estimates also showed that the number
of uninsured increased by 1.8 million from 2019 to 2020, even as
employer-based insurance covered nearly 6 million fewer people.
Keisler-Starkey and Bunch. Health Insurance Coverage in the United
States: 2020.
\8\ Keisler-Starkey and Bunch. Health Insurance Coverage in the
United States: 2020, Table A-1.
Many of us weathered the storm, but many did not; this signals that
our work to secure affordable and equitable health care is far from
complete. Earlier this year, the members of this committee and other
national leaders once again stepped forward to protect the American
people. By passing the American Rescue Plan, you made health care
substantially more affordable for people who buy their own insurance.
You guaranteed that, through the end of 2022, no one in America will be
forced to pay more than 8.5 percent of their income for benchmark
private insurance.\9\ At the same time, you dramatically lowered
premiums charged to millions of hardworking families who buy their own
insurance, unable to get health care on the job.
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\9\ American Rescue Plan Act of 2021, Pub. L. 117-2, March 11,
2021, section 9661, https://www.congress.gov/117/plaws/publ2/PLAW-
117publ2.pdf.
Almost before the ink was dry from President Biden's signature on
the American Rescue Plan, families all across this Nation saw their
health-care costs dramatically fall and their health security
strengthen. During just the 6 months from February 15 to August 15,
2021, nearly 3 million people signed up for coverage through health
insurance marketplaces--and no wonder!\10\ Average premium costs
dropped by 50 percent, as nearly half of families coming to the Federal
marketplace were charged $10 or less in monthly premiums for health
coverage.\11\ The median deductible for families new to the Federal
marketplace fell by 90 percent, from $750 to $50.\12\
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\10\ Centers for Medicare and Medicaid Services (CMS). 2021 Final
Marketplace Special Enrollment Period Report. September 15, 2021,
https://www.hhs.gov/sites/default/files/2021-sep-final-enrollment-
report.pdf.
\11\ CMS. 2021 Final Marketplace Special Enrollment Period Report.
\12\ CMS. 2021 Final Marketplace Special Enrollment Period Report.
Think about the impact on a family of four making $3,800 a month
who, in the past, could afford nothing better than a plan with a $7,000
deductible for each insured family member. Today, by spending $38 on
monthly premiums, that same family can buy insurance with a deductible
of $800 instead of $7,000.\13\ That's enormous progress.
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\13\ Before the ARP, a family of four at 175 percent of the Federal
poverty level (FPL) purchasing coverage with premiums at national
average levels would have had to pay $12 for bronze coverage and $204
for silver coverage. After the ARP, the cost of silver has declined to
$38. Kaiser Family Foundation. Health Insurance Marketplace Calculator
(undated), https://www.kff.org/interactive/subsidy-calculator/. In
healthcare.gov, the average combined deductible for a single individual
is $6,921 for a bronze plan and $800 for an 87 percent-actuarial value
silver plan, which would be available to a family with income at 175
percent of FPL. Kaiser Family Foundation. Cost-Sharing for Plans
Offered in Federal Marketplace for 2021. January 14, 2021, https://
files.kff.org/attachment/Cost-Sharing-for-Marketplace-for-2021.pptx.
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And behind every one of these numbers is a real person's story:
Kristen Black from Lufkin, TX lost her employer-sponsored
health insurance in 2019 when she had to switch from working full time
to part time because of a chronic health condition. Kristen worked with
a local insurance navigator and found a gold plan that allowed her to
access the doctors and medication she needs to manage her chronic
condition. Two years later with the new American Rescue Plan subsidies,
Kristen's plan went from costing her $333.10 per month to $177.10 per
month. Saving over $150 every month is a huge help to Kristen. She is
finally getting the care she needs at a price she can afford.
Sheryl Hagen from Missouri couldn't afford the $300 premium
her employer charged for health insurance, so she went without. Earlier
this year, Sheryl had a health scare that led to a $1,300 bill, so she
decided to sign up for insurance. She found a marketplace plan that
cost her $73 a month. After President Biden signed the American Rescue
Plan into law, Sheryl reapplied, and her monthly premium was cut to $0.
April Henry, an Oregon-based writer who formerly worked in the
health-care industry, and her husband began saving $700 a month on
premiums after they went back to the marketplace following enactment of
the American Rescue Plan. The two of them can now save more for
retirement and help their 25-year-old daughter with upcoming dental
surgery.
Your hard work earlier this year has already paid off for Kristen
and Sheryl and April and millions of other struggling families. In
2010, Congress passed legislation that sought to guarantee all families
affordable access to quality health care and protection from costs that
deplete the family budget. That promise is closer to fruition than ever
before. But all of the extra help hard-working families receive from
the American Rescue Plan will come to an end in less than 14 months,
unless you once again lead the way on American health care through
Build Back Better legislation.
building back better
Build Back Better legislation gives America's leaders an
opportunity to finish the job we started in 2010, to finally make sure
that everyone in this country is guaranteed access to affordable, high-
quality health care. If you act boldly and decisively in the coming
weeks, you can provide real relief to so many people in America who are
currently forced to choose between feeding their family and filling
their prescription.
Families USA supports a network of tightly linked proposals to
strengthen American health care. Employer-sponsored insurance, the
health insurance marketplace, and public programs like Medicare,
Medicaid, and the Children's Health Insurance Program work together to
provide a spectrum of coverage for people across the lifespan. We urge
you to lower prescription drug costs for people in Medicare and the
commercial market, improve coverage for children and postpartum women,
help families provide long-term care at home or in the community for
seniors and family members with disabilities, enroll the eligible
uninsured into coverage, and finally make sure that Medicare
beneficiaries who worked hard all their lives receive essential
coverage for dental, vision, and hearing care.
But the focus of today's hearing is Medicaid and marketplace
coverage. I'm therefore going to center my remaining remarks on two
proposals: guaranteeing essential health care to low-income adults who
are uninsured because of their States' stubborn refusal to provide
Medicaid to their poorest residents; and ensuring that the American
Rescue Plan's dramatic improvements to the affordability of private
insurance won't be taken away from the millions of families who now
rely on them.
closing the medicaid coverage gap
The Medicaid program is a cornerstone of American health care. It
covers nearly half of all births and, together with the Children's
Health Insurance Program, half of all children under age 6.\14\ It is
the country's largest source of funding for substance use treatment and
prevention, covering almost 40 percent of adults suffering from opioid
use disorders.\15\ Medicaid is America's leading source of coverage for
long-term services and supports, serving six out of every ten nursing
home residents.\16\ And after controlling for socioeconomic factors,
low-income families often have better access to care and more financial
protection in Medicaid than in private coverage, at a cost that is 10
percent lower for children and 25 percent lower for adults.\17\
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\14\ Manatt, Phelps and Phillips, LLP. Medicaid's Role in
Children's Health. Robert Wood Johnson Foundation, February 1, 2019,
https://www.rwjf.org/en/library/research/2019/02/medicaid-s-role-in-
children-s-health.html. From July 2019 to April 2021, the number of
children covered through Medicaid and CHIP rose from 35.2 million to
38.9 million. Center for Medicaid and CHIP Services (CMCS), Medicaid
and CHIP Enrollment Trends Snapshot through June 2020 (undated),
https://www.medicaid.gov/medicaid/national-medicaid-chip-program-
information/downloads/june-medicaid-chip-enrollment-trend-snapshot.pdf;
CMCS, Medicaid and CHIP Enrollment Trends Snapshot through April 2021
(undated), https://www.medicaid.gov/medicaid/national-medicaid-chip-
program-information/downloads/april-2021-medicaid-chip-enrollment-
trend-snapshot.pdf.
\15\ Manatt, Phelps and Phillips, LLP. Medicaid's Role in Fighting
the Opioid Epidemic. Robert Wood Johnson Foundation, February 1, 2019,
https://www.manatt.com/Manatt/media/Media/Images/White%20Papers/Issue-
6-Medicaid-s-Role-in-Fighting-the-Opioid-Epidemic.pdf.
\16\ Kaiser Family Foundation. Medicaid's Role in Nursing Home
Care. June 2017, https://www.kff.org/infographic/medicaids-role-in-
nursing-home-care/.
\17\ Julia Paradise and Rachel Garfield. What is Medicaid's Impact
on Access to Care, Health Outcomes, and Quality of Care? Kaiser Family
Foundation, August 2, 2013, https://www.kff.org/report-section/what-is-
medicaids-impact-on-access-to-care-health-outcomes-and-quality-of-care-
setting-the-record-straight-on-the-evidence-issue-brief/; John Holahan
and Sharon K. Long. Costs, Access, and Utilization under Medicaid: A
Review of the Evidence. Urban Institute, June 30, 2006, https://
www.urban.org/sites/default/files/publication/50326/1001002-Costs-
Access-and-Utilization-Under-Medicaid-A-Review-of-the-Evidence.PDF;
Teresa A. Coughlin, Sharon K. Long, Lisa Clemans-Cope and Dean Resnick.
What Difference Does Medicaid Make? Assessing Cost Effectiveness,
Access, and Financial Protection under Medicaid for Low-Income Adults.
Urban Institute, May 2013, https://www.kff.org/wp-content/uploads/2013/
05/8440-what-difference-does-medicaid-make2.pdf.
The Affordable Care Act built on that record of accomplishment,
extending Medicaid coverage to adults with incomes up to 138 percent of
the Federal poverty level, with very generous Federal financial
support. In more than three out of every four American States,
governors and State legislators from both parties have gratefully taken
advantage of Federal financial incentives to implement this extension--
and for good reason. An impressive research base now confirms that
Medicaid expansion saves lives, protects people from cancer and other
serious diseases, helps combat the scourge of addiction, prevents
bankruptcy, saves money for State budgets, boosts employment, and keeps
the doors open in rural hospitals.\18\ And there is no clearer example
of the whole community's need for health coverage than the COVID-19
pandemic: newly infected people without insurance delay seeking care
because of cost, which lets the virus spread, undetected and untreated.
Based on peer-reviewed literature, insurance gaps in Texas, Florida,
Oklahoma, Georgia, and Mississippi were linked to more than 40 percent
of those coverage-gap States' COVID-19 deaths.\19\ Truly, in places
where many of us are uninsured, all of us are at risk.
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\18\ Madeline Guth and Meghana Ammula. Building on the Evidence
Base: Studies on the Effects of Medicaid Expansion, February 2020 to
March 2021. Kaiser Family Foundation, May 6, 2021, https://www.kff.org/
medicaid/report/building-on-the-evidence-base-studies-on-the-effects-
of-medicaid-expansion-february-2020-to-march-2021/; Madeline Guth,
Rachel Garfield, and Robin Rudowitz. The Effects of Medicaid Expansion
under the ACA: Studies from January 2014 to January 2020. Kaiser Family
Foundation, March 17, 2020, https://www.kff.org/medicaid/report/the-
effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-
literature-review/.
\19\ Stan Dorn. The Catastrophic Cost of Uninsurance: COVID-19
Cases and Deaths Closely Tied to America's Health Coverage Gaps.
Families USA, March 2021, https://familiesusa.org/wp-content/uploads/
2021/03/COV-2021-64_Loss-of-Lives-Report_Report_v2_4-20-21.pdf.
More than 2 million adults in this country are currently uninsured
because they have the misfortune of being poor while living in one of
the dozen States that stubbornly refuse to extend Medicaid coverage to
their lowest-income residents. In these States, parents cannot get
Medicaid unless they have extremely low incomes. In Mississippi, for
example, a working mom with two children can't get Medicaid unless she
earns $115 a month or less.\20\ And adults who are neither pregnant nor
caring for dependent children are flatly ineligible for health care, no
matter how low their income and how severe their need. This cruel
exclusion denies health care to desperately poor people who are
homeless, who have been diagnosed with a life-threatening illness, or
are struggling with severe and untreated mental health or substance use
disorders. It makes no sense to say that those who need help the most
receive the least, but that is exactly what happens in coverage-gap
States.
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\20\ Kaiser Family Foundation. ``Medicaid Income Eligibility Limits
for Adults as a Percent of the Federal Poverty, as of January 1,
2021.'' State Health Facts, https://www.kff.org/health-reform/state-
indicator/medicaid-income-eligibility-limits-for-adults-as-a-percent-
of-the-federal-poverty-level/
?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:
%22asc%22%7D; Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health and Human Services. HHS Poverty
Guidelines for 2021, https://aspe.hhs.gov/topics/poverty-economic-
mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-
register-references/2021-poverty-guidelines.
Many of us believe that public benefits should support rather than
undermine work. But if that Mississippi mother sees her pay rise from
$115 to $120 a week, she loses her health care. Closing the coverage
gap is needed so struggling families can climb the economic ladder
without losing their health insurance. If they earn more, they may need
to pay more for health care, but never again will moms and dads be
penalized with the loss of health insurance if they try to make a
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better life for their children.
This is not a hypothetical concern. Consider the stories of Della
and Wendy.
Wendy is a restaurant manager from Metairie, LA. Like 70 percent of
all Louisiana businesses that employ fewer than 50 people,\21\ her
restaurant doesn't provide health insurance. She applied for Medicaid
before 2016 and was turned down. She worked so many hours that she made
just a little too much money to qualify. When Louisiana became the
first State in the Deep South to extend Medicaid to all low-wage
workers, Wendy was one of more than 600,000 Louisianans who gained
access to health-care coverage.\22\
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\21\ Agency for Healthcare Research and Quality, Center for
Financing, Access and Cost Trends. ``Table II.A.2 Percent of private-
sector establishments that offer health insurance by firm size and
State: United States, 2020.'' 2020 Medical Expenditure Panel Survey-
Insurance Component, https://meps.ahrq.gov/data_stats/summ_tables/insr/
state/series_2/2020/tiia2.htm.
\22\ Office of the Governor of Louisiana. Governor Edwards
Celebrates the 5-year Anniversary of Medicaid Expansion That Continues
to Save Lives, Jobs, Rural Hospitals and Reduce the Number of Uninsured
Louisianans. July 1, 2021, https://gov.louisiana.gov/index.cfm/
newsroom/detail/3253.
That let her go to the doctor, who diagnosed Wendy as having a
thyroid condition. The doctor quickly prescribed medication to keep it
managed. As a result, she's healthier, feeling better, and losing
weight. There is no telling how her health would have degenerated
without Medicaid--quality coverage which she never believed was
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possible for her.
Just 500 miles away from Wendy, Della is a kidney transplant
recipient living in Henry County, GA.
Georgia is one of the 12 States that stubbornly refuse to provide
all their low-income residents with health care. As a result, Della
earns $100 too much to qualify for Medicaid. Without this coverage, she
couldn't afford to take daily immunosuppressant medication. As a
result, her new kidney failed. She is now forced to undergo expensive
and exhausting dialysis treatments, which limit her ability to work and
are sending her deeper and deeper into medical debt.
In America, your health and financial self-sufficiency should not
vary by zip code. Both Della and Wendy should be able to find the
quality, affordable coverage they need to remain healthy and thrive,
but Della is still stuck in the Medicaid coverage gap.
And make no mistake: people of every race and ethnicity have their
lives and economic security endangered by their States' refusal to
offer them Medicaid. But families of color are in particular danger.
Compared to white adults in non-expansion States, Black adults are 46
percent more likely and Latinos more than twice as likely to lack
insurance because they fall into the coverage gap.\23\ Put simply,
anyone who believes in health equity must also be committed to closing
the Medicaid coverage gap.
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\23\ Analysis of Figure 3, results for adults ages 19-64, in
Samantha Artiga, Latoya Hill, Kendal Orgera, and Anthony Damico. Health
Coverage by Race and Ethnicity, 2010-2019. Kaiser Family Foundation,
July 16, 2021, https://www.kff.org/racial-equity-and-health-policy/
issue-brief/health-coverage-by-race-and-ethnicity/.
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making health care affordable for people who buy their own insurance
The American Rescue Plan fixed one of the biggest remaining holes
in America's health insurance system: unaffordable costs that prevent
people from buying insurance when they don't get health benefits on the
job. Before that plan took effect, almost 75 percent of uninsured
families said they lacked health care because they could not afford
insurance.\24\
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\24\ The second most common reason given in response to the survey,
ineligibility for coverage, was cited by only 25 percent of uninsured
families. Survey respondents could give more than one explanation for
lacking insurance. Jennifer Tolbert, Kendal Orgera, and Anthony Damico.
Key Facts about the Uninsured Population. Kaiser Family Foundation,
November 6, 2020, https://www.kff.org/uninsured/issue-brief/key-facts-
about-the-uninsured-population/.
As I noted earlier, the American Rescue Plan cut families' average
premium costs by 50 percent in the health insurance marketplace and
lowered median deductibles by 90 percent.\25\ The American people
showed how much this improved their ability to afford health care for
their families: During the COVID-19 special enrollment period that
ended on August 15, the number of people insured through health
insurance marketplaces shot upward by nearly 3 million, or 35 percent,
in just 6 short months.\26\
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\25\ CMS. 2021 Final Marketplace Special Enrollment Period Report.
\26\ By the end of the Special Enrollment period, 8.0 million
people previously receiving marketplace coverage were joined by an
additional 2.8 million new members, representing a 35-percent increase.
CMS. 2021 Final Marketplace Special Enrollment Period Report.
People of all races and ethnicities need affordable health care,
but working-class people in communities of color have a particularly
large stake in making sure that American Rescue Plan's affordability
assistance remains in place. Based on the most recent available Census
Bureau data, Black and Latino adults are 50 percent more likely than
White adults to qualify for financial help buying marketplace coverage
and thus to benefit from the American Rescue Plan.\27\
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\27\ In 2019, the most recent year for which data are available,
among citizens and lawfully present immigrants age 19-64, 10.0 percent
of whites qualified for premium tax credits, including both those who
enrolled in individual-market coverage and those who were uninsured
despite qualifying for assistance. Among adults of color, 14.5 percent
were eligible for premium tax credits and either uninsured or enrolled
in individual-market plans, including 16.4 percent of Indigenous
adults, 15.4 percent of African-American adults, 15.2 percent of Latino
adults, and 11.4 percent of Asian-American/Pacific-Islander adults.
Unpublished analysis of 2019 ACS data by the National Center for
Coverage Innovation at Families USA, accessed through IPUMS USA,
University of Minnesota, www.ipums.org.
By keeping affordability assistance in 2023 and beyond, you will be
doing more than helping millions of families obtain affordable health
care, vital though that goal is. You will also give peace of mind to
nearly 170 million people who get health coverage on the job.\28\ In
America, if you lose your job, your family can lose its health
insurance. By making it truly affordable for people to buy their own
insurance, Build Back Better legislation can guarantee that a pink slip
will no longer take away health insurance. As a result, parents will no
longer spend sleepless nights worrying that, if they lose their job,
they might not be able to take their sick child to the doctor, or may
be forced to choose between paying the utility bills and paying for
Dad's blood-pressure medicine that he needs to prevent another heart
attack.
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\28\ Kaiser Family Foundation. ``Health Insurance Coverage of the
Total Population (CPS): 2020.'' State Health Facts, https://
www.kff.org/other/state-indicator/health-insurance-coverage-of-the-
total-population-cps/
?dataView=1¤tTimeframe=0&sortModel=%7B%22colId%22:%
22Location%22,%22sort%22:%22asc%22%7D.
American entrepreneurship will also receive a much-needed boost.
Instead of forcing people to stay in dead-end jobs just to keep their
insurance, people can finally start that business they've always
dreamed of, knowing that, if they go out on their own, they are
guaranteed the ability to buy affordable health care. From 1978 through
2010, new business formation in America plummeted, falling from more
than 15 percent of all companies to just 9 percent.\29\ Since 2010 that
number has stabilized, but now it's time to reverse the trend and
galvanize the creation of new American businesses. One crucial step
towards that end is making the American Rescue Plan's affordability
improvements permanent. That will help people start their own companies
by guaranteeing that, after they go out on their own, entrepreneurs
will still able to get affordable health insurance for themselves and
their families.
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\29\ U.S. Census Bureau, Business Dynamics Statistics, ``Rate of
establishments born during the last 12 months,'' Business Dynamics
Statistics: Establishment Age: 1978-2019, downloaded on October 10,
2021, from https://data.census.gov/cedsci/table?q=BDSTIMESERIES.BDSEAGE
&tid=BDSTIMESERIES.BDSEAGE&hidePreview=true.
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now is the time for action
We face tremendous challenges as a country, but we also have an
extraordinary chance to learn from the mistakes of the past and make an
historic investment in our collective health and economic recovery.
Improving access to affordable health care for every family in America
is a cornerstone of that opportunity, and I urge every single member of
this committee, and all of your colleagues in Congress, to put the
needs of America's families first by immediately passing a bold and
comprehensive Build Back Better Act.
______
Questions Submitted for the Record to Frederick Isasi, J.D., MPH
Questions Submitted by Hon. Ron Wyden
Question. When we assess ways to expand health insurance coverage
and improve affordability for families, it is critical to remember the
important role that States can play as innovators. That is why we
established the State waiver process under section 1332 of the ACA.
This process provides important flexibilities for States to improve
coverage and affordability, while maintaining crucial guard rails.
These guard rails ensure that the coverage provided is as comprehensive
as it would be under the ACA, is as affordable as coverage would be
under the ACA, covers as many people as would be covered under the ACA,
and does not increase the Federal deficit.\1\ States have used these
so-called ``1332 waivers'' to stand up reinsurance programs that have
helped reduce premiums on the Marketplaces. States are also using the
waivers to pursue new approaches to lowering costs, including public
option approaches.
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\1\ Patient Protection and Affordable Care Act Sec. 1332 (Pub. L.
111-148, as amended by Pub. L. 111-152).
Can you discuss how States have used section 1332 waivers to offer
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affordable health-care choices for families?
Answer. State waivers are essential tools to enable States to
innovate to meet the needs of their residents who don't have adequate
access to affordable care options. Most States (15 out of the 16 with
Federal approval) have used 1332 waivers to fund reinsurance, which
stabilized insurance markets and lowered premiums for those who buy
insurance without help from premium tax credits.\2\ Recently, States
like Nevada, Colorado, and Washington are using such waivers to jump
start price competition by introducing new, lower-cost plans, including
publicly administered coverage, as an option for consumers.
---------------------------------------------------------------------------
\2\ J. Pitsor, S. Scotti, ``State Roles Using 1332 Health
Waivers,'' National Conference of State Legislatures, July 2021,
https://www.ncsl.org/research/health/state-roles-using-1332-health-
waivers.aspx, (accessed 11/09/21).
Question. What can Congress do to allow more States to leverage
1332 waivers to expand affordable coverage in their States, while still
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meeting the critical guardrails that section 1332 requires?
Answer. Congress could do more to make these waivers effective. In
particular, America faces a huge enrollment gap. Many would be
surprised to know that two-thirds of uninsured people qualify for
Medicaid, CHIP, or premium tax credits but are not enrolled, and
roughly half of them are eligible for zero-premium coverage.\3\ People
of color are particularly likely to fall into this enrollment gap.\4\
The deficit neutrality guard rail in the 1332 statute has been
interpreted to bar Federal funding for State policies that increase
enrollment of uninsured people who qualify for premium tax credits
(PTCs). If a waiver would improve participation rates among PTC-
eligible consumers, the State would need to pay the full resulting
increased costs. As a practical matter, this means that States cannot
go forward with such innovation. A technical change to the statutory
language in section 1332 would let States experiment with innovative
methods for enrolling the eligible uninsured, putting 1332 waivers on
the same footing as Medicaid 1115 waivers and SNAP waivers, which keep
Federal funding in place when States increase enrollment of eligible
people.
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\3\ Matthew Rae, Cynthia Cox, Gary Claxton, Daniel McDermott, and
Anthony Damico, How the American Rescue Plan Act Affects Subsidies for
Marketplace Shoppers and People Who Are Uninsured. Kaiser Family
Foundation, March 25, 2021, https://www.kff.org/health-reform/issue-
brief/how-the-american-rescue-plan-act-affects-subsidies-for-
marketplace-shoppers-and-people-who-are-uninsured/ (accessed 11/11/21).
\4\ S. Artiga, L. Hill, K. Orgera, Health Coverage by Race and
Ethnicity 2010-2019, Kaiser Family Foundation, July 2021, https://
www.kff.org/racial-equity-and-health-policy/issue-brief/health-
coverage-by-race-and-ethnicity/ (accessed 11/09/21).
______
Questions Submitted by Hon. Sheldon Whitehouse
Question. Please elaborate on your oral testimony that self-
employed and small business owners cannot currently access high-quality
affordable health insurance and would benefit from the availability of
a public option.
How can Congress design a public option to meet the challenges that
prevent these populations from accessing health insurance on the
exchanges?
Answer. For many years, small business employers have lagged behind
larger firms in providing their employees with health coverage. All
companies struggle with high and rising health-care prices, but small
employers have less leverage to obtain coverage on favorable terms.
Comparing companies with 100 or more employees to those with fewer than
50, people at small firms were roughly half as likely to be covered by
employer-based insurance in 2020 (27.8 percent versus 57.0 percent).\5\
For individuals who do receive an offer of coverage through their
employer, premiums are higher than those of their colleagues at larger
businesses ($7,045 and $7,197 for companies with fewer than 50 and
those with 100 or more workers, respectively), and deductibles were
more than 30 percent higher at smaller firms ($2,376 versus $1,814).\6\
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\5\ G. Edward Miller and Patricia Keenan. Trends in Health
Insurance at Private Employers, 2008-2020. Agency for Healthcare
Research and Quality, July 2020, https://www.
meps.ahrq.gov/data--files/publications/st536/stat536.pdf (accessed 11/
11/21).
\6\ Miller and Keenan. Trends in Health Insurance at Private
Employers, 2008-2020.
Between 2014, when the Affordable Care Act's (ACA) main coverage
provisions took effect, and 2019, previous losses in small-employer
coverage came to a halt.\7\ But more progress is possible. In
particular, Congress could allow employers to purchase coverage offered
on the exchange, including public-option coverage. Massachusetts has
used this approach, combining the State's individual and small-group
market and letting small firms buy relatively inexpensive coverage. In
that case, the public program involved selective contracting with plans
to serve low- and
moderate-income people on the exchange, generally relying on managed
care organizations that began by serving Medicaid beneficiaries.
Alternative approaches could involve publicly administered provider
pricing, with requirements for providers to participate in public-
option networks or be excluded from other State-managed coverage
systems, including Medicaid and public employee insurance. The key
would be using public purchasing to leverage lower premiums while
assuring robust provider participation, then making these lower-
premium, publicly managed plans available in the small-group market.
---------------------------------------------------------------------------
\7\ Miller and Keenan. Trends in Health Insurance at Private
Employers, 2008-2020. In 2020, the number of workers receiving
employer-sponsored insurance fell at firms of all sizes, due to the
COVID-19 economic crash.
Question. How will a public option offered on the individual
exchange benefit not only those who enroll in the public option plan,
but also those who purchase private insurance coverage from the
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exchange?
Answer. A public option offered on the exchange would give its
private health insurance competitors new incentives to negotiate better
health-care prices and thereby lower premiums and other costs. As
prices decrease in both the public option and private coverage, health-
care costs would fall for consumers throughout the market.
To achieve this goal, it is essential to establish strong
guardrails that prevent the public option from eroding advance premium
tax credits (APTCs), which are based on the second-lowest cost silver
plan. Last year, health researchers at the RAND Corporation, working in
collaboration with Families USA and two leading actuarial firms,
estimated the impact of offering a public option in health insurance
marketplaces, with and without APTC guard rails.\8\ They found that,
with measures that prevented the public option from directly eroding
APTC values, consumers at all income levels would experience
significant health-care cost reductions due to the public option. By
contrast, without such guardrails, only higher-income consumers
ineligible for APTCs would benefit, and many lower-income consumers
would experience cost increases due to erosion in the purchasing power
provided by APTCs.
---------------------------------------------------------------------------
\8\ S. Dorn, ``Public Options and Other Policies to Lower Health
Insurance Premiums Need Guardrails to Protect Low- and Moderate-Income
Consumers,'' Families USA, June 2020, https://familiesusa.org/
resources/public-options-and-other-policies-to-lower-health-insurance-
premiums-need-guardrails-to-protect-low-and-moderate-income-consumers/
(accessed 11/09/21).
Families USA strongly supports Federal policy that would add a
public option to health insurance exchanges. In addition to APTC
guardrails, the policy should have strong incentives for providers to
serve beneficiaries of a public option, thereby meeting provider
network standards and making the public option a viable choice for
consumers. It also will be essential for a public option to provide
real financial security for consumers and access to care by covering
comprehensive benefits, including but not limited to services
classified as essential health benefits under the ACA. Full parity of
coverage between mental and physical health care is likewise
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fundamental, as are limits on consumer premium and out-of-pocket costs.
______
Question Submitted by Hon. Tim Scott
Question. We are seeing tremendous progress with therapeutic and
technological innovations that could soon cure diseases such as Sickle
Cell Disease.
As the science outpaces policy, how can reimbursement arrangements
and public programs evolve to ensure immediate patient access for one-
time curative treatments?
Answer. There is no simple answer to this question. Fundamentally,
our Nation should ensure fairness in access to lifesaving treatments--
no one's health should depend on their wealth. Yet, as it stands,
almost one in three people can't fill prescriptions because of cost.\9\
Congress must allow the government to be a better steward of the
dollars being spent on all pharmaceuticals, to ensure resources are
available to invest in high-value treatments, even when expensive. To
that end, Congress must empower the government to negotiate for fair
drug prices, either at launch of the drug or as prices go up (e.g.,
annually). Politically there is tremendous support for this idea from
the public, with nearly nine in 10 people (88 percent) in favor of
allowing the Federal Government to negotiate for lower prices,
including more than three-fourths (77 percent) of Republicans, nine in
10 independents (89 percent) and 96 percent of Democrats.\10\
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\9\ Fishman, Eliot. ``Too Many People Are Skipping or Changing
Medications Because They Are Too Expensive.'' Families USA, June 14,
2021, https://familiesusa.org/resources/too-many-people-are-skipping-
or-changingmedications-because-they-are-too-expensive/.
\10\ Kirzinger, Ashley, Audrey Kearney, Mellisha Stokes, and
Mollyann Brodie. ``KFF Health Tracking Poll--May 2021: Prescription
Drug Prices Top Public's Health Care Priorities.'' KFF, June 3, 2021,
https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-
may-2021/.
In addition, policymakers should look to the Medicaid program.
Medicaid provides health coverage for millions of Americans, including
many with complex health needs. Prescription drug coverage is a key
component of Medicaid for many beneficiaries, and Federal law requires
manufacturers who want their drugs covered under the program to rebate
a portion of drug payments to the government, referred to as the
Medicaid Drug Rebate Program. It also includes an inflationary
component that requires additional rebates when average manufacturer
prices for a drug increase faster than inflation. Because of this,
Medicaid covers almost all FDA-approved drugs produced by those
manufacturers with an open formulary--meaning patients have access to
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novel, lifesaving medicines.
______
Question Submitted by Hon. James Lankford
Question. The Affordable Care Act allows taxpayer funding for
abortion on demand, but at the very least it acknowledged the right of
States to prohibit abortion coverage on the exchanges and that abortion
could not be required as an essential health benefit. Eleven of the 12
States that have chosen not expand Medicaid have also chosen to
prohibit abortion coverage on the exchanges. As written, the Democrats'
reconciliation proposal would override these State laws and mandate
coverage of, and funding for, abortions on demand, and transportation
services to acquire them, for those under 138 percent of poverty and
without cost sharing in 2024. However, the bill refers to abortions in
an underhanded way.
Do you agree that abortion coverage is mandated and funded by the
proposed reconciliation bill's reference to family planning services
``which are not otherwise provided under such plan as part of the
essential health benefits package'' (subsection (c) of section 137505)?
Answer. I believe that access to a free and safe abortion is an
essential component of women's health care, and that women should be
trusted to make their own health-care decisions. It is critical that we
repeal the Hyde Amendment and ensure coverage for the full spectrum of
reproductive health care under Medicaid and marketplace plans. That
said, the reconciliation text does not mandate or fund abortion
coverage beyond the Hyde Amendment's limited scope of permitted
services.
______
Submitted by Hon. Tim Scott, a U.S. Senator From South Carolina
United States Senate
washington, dc 20510
October 15, 2021
The Honorable Chiquita Brooks-LaSure
Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244
Dear Administrator Brooks-LaSure:
We write to express our support for the Medicare Advantage (MA) program
and our commitment to work with the Centers for Medicare and Medicaid
Services (CMS) to ensure the program continues to provide high-quality,
affordable care to over 26 million seniors and enrollees with
disabilities who qualify for Special Needs Plans.\1\
---------------------------------------------------------------------------
\1\ https://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/MCRAdvPartDEnrolData.
Medicare beneficiaries, including many in rural communities, have
access to more MA coverage options nationwide today than at any time
during the last decade.\2\ MA's consistently high rates of beneficiary
satisfaction and its growing enrollment are a demonstration of its
value. Today, MA provides coverage to approximately 42 percent of all
Medicare beneficiaries across the country, with enrollment in over half
of the U.S. States meeting or exceeding this national average.
---------------------------------------------------------------------------
\2\ https://connect.kff.org/medicare-advantage-enrollment-has-more-
than-doubled-over-the-past-decade-see-the-latest-data-and-trends.
Payment stability is critical to protecting and strengthening this
popular choice for seniors, particularly since these seniors have paid
into the Medicare program and expect to continue to receive the
excellent, reasonably priced care offered by MA. As Congress and the
Administration work together to find opportunities to promote better
access to care and reduce costs, ensuring that MA's care delivery model
remains strong and stable should remain a priority. The MA program is
essential to fulfilling the CMS's commitment to improving and
delivering high-quality, accessible, affordable, and equitable care
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choices to Medicare beneficiaries.
MA delivers first-rate coverage to an increasingly diverse population.
According to a recent analysis, growth in MA enrollment from 2009 to
2018 was greatest among Black and Latino Americans, as well as,
individuals dually eligible for Medicare and Medicaid. The latter group
currently accounts for 31 percent of MA beneficiaries from a racial or
ethnic minority, compared with 21 percent of racial or ethnic minority
beneficiaries enrolled in Medicare Fee-for-Service (FFS).\3\ Diversity
in enrollment is partly growing in response to the comprehensive
benefits MA offers to its beneficiaries, including an expansion of zero
premium plans, the addition of supplemental benefits aimed at
addressing social determinants of health, and the establishment of
Special Needs Plans. The increasing participation in MA of Black,
Latino, and dual-eligible individuals underscores the critical
importance of continuing to support coverage options that address the
unique needs of a diverse beneficiary population and further improve
health equity.\4\
---------------------------------------------------------------------------
\3\ David J. Meyers, Vincent Mor, Momotazur Rahman, and Amal N.
Trivedi. Growth in Medicare Advantage Greatest Among Black and Hispanic
Enrollees. Health Affairs, 40, no. 6 (2021): 945-950.
\4\ David J. Meyers, Vincent Mor, Momotazur Rahman, and Amal N.
Trivedi. Growth in Medicare Advantage Greatest Among Black and Hispanic
Enrollees. Health Affairs, 40, no. 6 (2021): 945-950.
The comprehensive and innovative MA clinical care model promotes
primary care and is providing seniors with value-based care that can be
of a higher quality than Medicare FFS, resulting in improved health
outcomes and cost savings. MA offers financial protections from high
out-of-pocket costs not available in Medicare FFS, which is an
important benefit for the more than half of MA beneficiaries that have
low fixed incomes of less than $30,000 annually.\5\ The MA model
prioritizes care coordination, early diagnosis, and treatment of
chronic conditions, and is strengthened by MA's ability to offer
benefits aimed at addressing social determinants of health including
vision, dental, hearing, telehealth services, transportation, meal
services and delivery, in-home support services, and other wellness
benefits.
---------------------------------------------------------------------------
\5\ https://www.ahip.org/wp-content/uploads/
MA_Demographics_Report_2019.pdf.
During the ongoing COVID-19 pandemic, MA is protecting and supporting
seniors and individuals with disabilities by providing more care in the
home through meal delivery, providing personal protective equipment,
multifaceted beneficiary engagement, vaccine education, and delivery
services to underserved communities. MA plans are also supporting
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beneficiaries by utilizing telehealth visits.
To ensure this continuum of care, we stand ready to protect MA from
payments cuts, which could lead to higher costs and premiums, reduce
vital benefits, and undermine advances made to improve health outcomes
and health equity for MA enrollees.
We look forward to partnering with you to fulfill CMS's commitment to
improving health-care access, quality, and affordability, and to
advancing health equity. We are committed to building on the progress
already made by protecting proven health-care coverage options like MA
for the program's more than 26 million beneficiaries--including the
millions of seniors we represent in our States.
Sincerely,
Kyrsten Sinema Tim Scott
U.S. Senator U.S. Senator
Gary C. Peters Shelly Moore Capito
U.S. Senator U.S. Senator
Jon Tester Todd Young
U.S. Senator U.S. Senator
Jacky Rosen Marco Rubio
U.S. Senator U.S. Senator
Joe Manchin III Deb Fischer
U.S. Senator U.S. Senator
Jeanne Shaheen Mark Kelly
U.S. Senator U.S. Senator
Angus S. King, Jr.
U.S. Senator
______
Putting Patients First: Innovative Solutions for
Prescription Drugs and Older Americans
U.S. Senate
Special Committee on Aging
Senator Tim Scott (R-SC)
Ranking Member
SEPTEMBER 2021
EXECUTIVE SUMMARY
``God uses a lot of different things to get you where you need to be,''
said James Deer, a lawn care businessman from Ulmer, SC, who, at the
age of 59, faced a rare bone marrow cancer diagnosis.\1\ As he quickly
discovered, treatments are scarce. Now 62, Mr. Deer is doing better
after participating in a trial to treat his cancer with medication
called AG-120. It produced a complete response.
---------------------------------------------------------------------------
\1\ Birch, J. (2021, July 8). Clinical trial gives cancer patients
new hope. MUSC. Retrieved July 29, 2021, from https://
hollingscancercenter.musc.edu/news/archive/2021/07/08/musc-hollings-
clinical-trial-gives-cancer-patients-new-hope.
For Mr. Deer and countless others, particularly older Americans, access
to treatments and the innovation that drives them makes all the
difference, often, between life and death. Today's biomedical
innovations bring about modern miracles that have extended lifespans by
millions of years over the last 4 decades, which is cause for
celebration, particularly for the United States Senate Special
Committee on Aging.\2\ These advances ought to inspire wonder,
appreciation, relief, and hope. They also deserve policymakers'
support.
---------------------------------------------------------------------------
\2\ Kurczy, S. (2019, February 12). Calculating the Benefits of
Drugs. Ideas and Insights, https://www8.gsb.columbia.edu/articles/
ideas-work/calculating-benefits-drugs.
As part of their $3.5-trillion tax and spending plan, the Biden
administration and Congressional Democrats are including H.R. 3, the
Elijah E. Cummings Lower Drug Costs Now Act. This proposal reflects the
very best of intentions--a commitment to care for each other, to
support the most vulnerable, to better the lives of the suffering and
the forgotten--by helping patients afford lifesaving medicine. The
problem is that the Democrats' plan endeavors to remedy the current
situation through price controls. In other words, Democrats propose the
Federal Government should be in charge of deciding the price of
treatments, instead of a competitive free marketplace sustained by
---------------------------------------------------------------------------
companies driving innovation.
This report serves to inform policymaking debate by exploring the
consequences of H.R. 3 and price controls, which include long-term drug
shortages (an almost 50-percent decline in access to medicines);\3\
shattered innovation (a 50- to 90-percent decline in new medicines);\4\
and bankrupt businesses (an economic loss in the trillions of
dollars).\5\ Further, this report outlines policy options that will
lower drug prices and expand access to treatment by way of four key
mechanisms:
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\3\ PhRMA. Analysis of IQVIA Analytics Link and U.S. Food and Drug
Administration (FDA), European Medicines Agency (EMA), Japan
Pharmaceuticals and Medical Devices Agency (PMDA), Australia
Therapeutic Goods Administration (TGA) and Health Canada data. April
2021.
\4\ Vital Transformation. International Reference Pricing Under
H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
Fewer New Medicines Coming to Market Over 10 Years.
\5\ Tabarrok, A. (2011). Launching The Innovation Renaissance: A
New Path to Bring Smart Ideas to Market Fast (TED Books Book 8). TED
Books.
1. Allowing seniors to have lower out-of-pocket costs for Medicare
---------------------------------------------------------------------------
drugs;
2. Expanding choices for older Americans through Medicare Part D;
3. Supporting fair insulin prices in Medicare; and,
4. Increasing individualized care like value-based arrangements.
These policies will help older Americans find affordable treatments
that meet their needs while maintaining the market dynamism that makes
new medicine available in the first place. For Mr. Deer and those like
him, innovation is hope.
INTRODUCTION
Research shows that since 1982, new drugs provided an extra 150 million
years of life--and that the United States led the way with 719 new
drugs.\6\ This is nothing short of miraculous. For seniors, and for all
Americans, it is impossible to put a price on living longer and living
better. Sadly, that is exactly what H.R. 3 would do, to tragic effect.
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\6\ Cowen, T. (2019, April 23). Frank Lichtenberg and the cost of
saving lives through pharmaceuticals. Retrieved July 29, 2021, from
https://marginalrevolution.com/marginalrevolution/2019/04/-frank-
lichtenberg-and-the-cost-of-saving-lives-through-pharmaceuticals.html.
Consider James Deer of South Carolina, whose life has been improved by
innovative cancer medicine: gains from cancer treatments make up 73
percent of the advances in surviving over the past 3 decades, and 1.3
million people have survived cancer since 2000 because of new
drugs.\7\, \8\ The first section of this report explains how
H.R. 3 would place decades of medical advances at risk; the second
section posits how Congress can affordably preserve and advance our
nation's tremendous rhythm of developing breakthrough, lifesaving
medical achievements.
---------------------------------------------------------------------------
\7\ Seabury, S.A., Goldman, D.P., Gupta, C.N., et al. (2016).
Quantifying Gains in the War on Cancer Due to Improved Treatment and
Earlier Detection. Forum Health Econ Policy, 19(1), 141-156. doi:
10.1515/fhep-2015-0028.
\8\ MacEwan, J.P., Dennen, S., Kee, R., Ali, F., Shafrin, J., and
Batt, K. (2020). Changes in mortality associated with cancer drug
approvals in the United States from 2000 to 2016. J Med Econ, 23(12):
1558-1569. doi: 10.1080/13696998.2020.1834403.
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H.R. 3, Pricing Out Innovation
By institutionalizing Democrats' driving mechanism for lowering drug
costs--Federal regulation of drug price caps--H.R. 3 is a compassionate
idea that would lead to a disastrous outcome. Sadly, this proposal is a
core component of their $3.5-
trillion tax and spending plan to remake the economy. Here is how it
would work: the Federal Government would tell manufacturers how much
they can charge for medicine. The price could not exceed 1.2 times the
average price in the United Kingdom, Canada, France, Germany,
Australia, and Japan. Price controls would also be enforced.
Enforcing Price Controls
The Federal Government would set prices below this limit for some
number of drugs in a given year. Manufacturers would pay a tax--as high
as 95 percent--if they did not comply. If the federal government
decided that manufacturers had asked for too high a price for a
treatment in the past, they would be forced to pay even more. The six
countries on which the plan bases its regulations and taxes strictly
control drug prices to lower them. The hope is that the same would
happen in the U.S. Historically, there is good reason to believe this
hope is misplaced.
The Problem With Price Controls
Patients and families need lower prices and more options. Controls
produce the opposite effect. Price controls limit consumer choice by
forcing industry to cut investment in critical business aspects such as
research and development, innovation compliance costs, and ultimately
manufacturing and production. This has happened repeatedly throughout
history. When the U.S. put price controls on oil and gas in the 1970s,
production fell, and working people spent hours (and their paychecks)
in long lines waiting to fill their tanks.\9\ The controls failed to
lower prices, but prices did fall when President Reagan repealed the
regulations. For economists, this is common sense.
---------------------------------------------------------------------------
\9\ Rafuse, J. (2018, August 24). History 101: Price controls don't
work, chicagotribune.com. https://www.chicagotribune.com/news/ct-xpm-
2007-06-07-0706061080-story.html.
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Lessons Learned: Good Intentions, Bad Policy
Today, economists consider the United States' experiment with price
controls on gas a canonical example of well-intentioned but
counterproductive regulation.\10\ In extreme cases, like Venezuela or
the Soviet Union, price controls can ruin the economy.\11\ While H.R. 3
alone is not an extreme case, it is a step in the wrong direction that
could lead to extreme and harmful effects for seniors in need.
Policymakers should remember history's lessons--price controls limit
the availability of goods and services, and would restrict access to
prescription drugs.
---------------------------------------------------------------------------
\10\ Sumner, S. (2021, June 23). Temporary insanity (learning from
mistakes). Econlib, https://www.econlib.org/temporary-insanity-
learning-from-mistakes/.
\11\ The Economist. (2021, February 11). Cuba and Venezuela open
up, hesitantly, to the market, https://www.economist.com/the-americas/
2021/02/11/cuba-and-venezuela-open-up-hesitantly-to-the-market.
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The Same Shortage Story for Prescription Drugs
In 21 countries using price controls, according to one review, access
to treatments is limited.\12\ Cancer drugs are limited in Canada.\13\
Cardiology drugs are denied to patients in France, and multiple
sclerosis treatments to patients in the United Kingdom.\14\ In
Australia, patients are left with outdated drugs.\15\ Over 400 new
medicines were available to almost 90 percent of Americans in the last
decade, compared to only 52 percent of the H.R. 3 countries.\16\ U.S.
patients have access to 95 percent or more medicines for rare diseases,
cancer, vision, mental illness, HIV, Parkinson's, epilepsy, cystic
fibrosis, and multiple sclerosis. Patients in the H.R. 3 countries can
access 70 percent or less of these medicines.\17\ These shortages point
to significant declines in future innovation.
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\12\ Kanavos, P., Fontrier, A.M., Gill, J., and Efthymiadou, O.
(2019). Does external reference pricing deliver what it promises?
Evidence on its impact at national level. The European Journal of
Health Economics, 21(1), 129-151, https://doi.org/10.1007/s10198-019-
01116-4.
\13\ Ghoussoub, M. (2018, January 20). A tale of 2 friends with
breast cancer; 1 has coverage for costly drug, the other forced to pay.
Canadian Broadcasting Corporation, https://www.
cbc.ca/news/canada/british-colum-bia/a-tale-of-2-friends-with-breast-
cancer-1-has-coverage-for-costly-drug-the-other-forced-to-pay-
1.4495123.
\14\ Matthews-King, A. (2018, September 10). NHS will not fund MS
drug which can delay need for wheelchair by up to 7 years. The
Independent, https://www.independent.co.uk/news/health
/multiple-sclerosis-ms-wheelchair-progressive-nhs-drug-symptoms-nice-
ocrelizumab-a8528071.
html.
\15\ Layt, S. (2019, July 2). Patients take outdated drugs because
of PBS restrictions: UQ doctor. The Sydney Morning Herald, https://
www.smh.com.au/national/queensland/patients-take-outdated-drugs-
because-of-pbs-restrictions-uq-doctor-20190702-p523gt.html.
\16\ PhRMA. Analysis of IQVIA Analytics Link and U.S. Food and Drug
Administration (FDA), European Medicines Agency (EMA), Japan
Pharmaceuticals and Medical Devices Agency (PMDA), Australia
Therapeutic Goods Administration (TGA) and Health Canada data. April
2021.
\17\ PhRMA. (2021). Analysis of IQVIA Analytics Link and U.S. Food
and Drug Administration (FDA), European Medicines Agency (EMA), Japan
Pharmaceuticals and Medical Devices Agency (PMDA), Australia
Therapeutic Goods Administration (TGA) and Health Canada data.
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SHORTING THE FUTURE: INNOVATION, MEDICINE, AND THE INVISIBLE PATIENT
In public policy, the future lives affected by medicine innovation
should not be invisible.\18\ Hundreds of thousands more may have died
during the pandemic without the innovation of American vaccines.
Dorothy Nielsen, 88, from Mt. Pleasant, SC writes, ``[t]he
biopharmaceutical industry has really done amazing work creating not
just one, but multiple vaccines. The research and development these
amazing scientists have created should make all of us proud.''\19\ She
adds, ``[i]t is important that these companies continue to strive for
innovation on other diseases that will remain once COVID-19 has been
tamed.'' The Congressional Budget Office (CBO) says that H.R. 3 would
prevent a substantial amount of new drugs from coming to market.\20\
Price controls could cost businesses almost $2 trillion, a death
sentence--unless they severely slash investment in new treatments.\21\
As a result, consumers would lose access to more medications than the
CBO predicts.\22\ Lost access would have dire consequences for seniors.
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\18\ Tabarrok, A. (2021, January 29). The Invisible Graveyard Is
Invisible No More. Retrieved July 29, 2021, from https://
marginalrevolution.com/marginalrevolution/2021/01/the-invisible-
graveyard-is-invisible-no-more.html.
\19\ Nielsen, D.R. (2021, March 9). Letter to the Editor:
Scientists have done a remarkable job. Retrieved July 29, 2021, from
https://www.postandcourier.com/moultrie-news/opinion/letter-to-the-
editor-scientists-have-done-a-remarkable-job/article_4f85035c-7c3f-
11eb-87fc-1f160dc37643.
html.
\20\ Congressional Budget Office. H.R. 3, Elijah E. Cummings Lower
Drug Costs Now Act. (2019, December 10). Congressional Budget Office,
https://www.cbo.gov/publication/55936.
\21\ Stengel, K., Cole, M., and Brantley, K. (2021, July 6). Impact
of H.R.3 as Passed by the House on Federal Spending and Drug
Manufacturer Revenues. Avalere Health, https://avalere.com/insights/
impact-of-h-r-3-scenarios-on-federal-spending-and-drug-manufacturer-
revenues.
\22\ Axelsen, K., and Jayasuriya, R. (2021). Government
Scorekeepers Likely Underestimate the Impact of Lower Drug Costs Now
Act (H.R. 3) on Investment in Innovative Medicines: Brief. Charles
River Associates.
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The Tragedy of Lost Innovation
Price controls led to 25-percent fewer new drugs, and 2 years of lost
life expectancy, according to one study.\23\ New drugs also reduce
disability by up to 30 percent, according to another.\24\ Research
discovered that in 30 countries, drug innovation made up three-fourths
of a 1.74-year increase in life expectancy.\25\ For older Americans in
particular, these are not dry academic numbers on a spreadsheet; they
are marked improvements in the quality of daily life. Innovative drug
breakthroughs represent precious time on our livelihood and mortality
clocks, the sacrifice of which would be an immeasurable tragedy.
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\23\ Moreno, G., van Eijndhoven, E., Benner, J., and Sullivan, J.
(2017). The Long-Term Impact of Price Controls in Medicare Part D.
Forum for Health Economics and Policy, 20(2), https://doi.org/10.1515/
fhep-2016-0011.
\24\ Lichtenberg, F.R. (2019). The impact of access to prescription
drugs on disability in eleven European countries. Disability and Health
Journal, 12(3), 375-386, https://doi.org/10.1016/j.dhjo.2019.01.003.
\25\ Lichtenberg, F. (2012). Pharmaceutical Innovation and
Longevity Growth in 30 Developing and High-income Countries, 2000-2009.
National Bureau of Economic Research. Published, https://doi.org/
10.3386/w18235.
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Pricing Economic Growth Out of the Market
Research suggests that if cancer mortality fell by 10 percent,
Americans would gain $5 trillion--and maybe more if new drugs drove the
decline.\26\ Yet H.R. 3 would curtail that innovation, forfeiting
trillions. It would hurt small businesses that make new medicines the
most. The investments on which they rely would dry up as regulations
reduced their income by almost 60 percent.\27\ Price controls would
eliminate 4 percent of pharmaceutical jobs.\28\ On top of overall
economic decline, new drugs from small businesses would fall by 90
percent, which means 16 fewer medications for ovarian cancer, prostate
cancer, leukemia, and breast cancer; 10 fewer for hypertension,
pulmonary fibrosis, and brain cancer; and two fewer for diabetes and
COPD.\29\ On the ground, the magnitude of this impact becomes even
clearer.
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\26\ Tabarrok, A. (2011). Launching The Innovation Renaissance: A
New Path to Bring Smart Ideas to Market Fast (TED Books Book 8). TED
Books.
\27\ Vital Transformation. International Reference Pricing Under
H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
Fewer New Medicines Coming to Market Over 10 Years.
\28\ Moreno, G., van Eijndhoven, E., Benner, J., and Sullivan, J.
(2017). The Long-Term Impact of Price Controls in Medicare Part D.
Forum for Health Economics and Policy, 20(2), https://doi.org/10.1515/
fhep-2016-0011.
\29\ Vital Transformation. International Reference Pricing Under
H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
Fewer New Medicines Coming to Market Over 10 Years.
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H.R. 3 on the Ground: South Carolina
The biopharmaceutical sector contributes almost $7 billion to South
Carolina's economy every year, and nearly 25,000 jobs.\30\ The state
has 28 cutting-edge plants involved in creating new medicines.\31\ H.R.
3 would put them in jeopardy. It would do the same to over 18,000 South
Carolinians who participated in clinical trials in 2017, and to the
$290 million in yearly tax revenue generated by industry.\32\ For South
Carolina seniors, price controls would even impact retirement--three-
quarters of company shares are held by mutual funds, endowments, and
pension funds. Policymakers should also keep in mind that the lives of
everyday Americans are the driving concern behind these figures.
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\30\ TEConomy Partners. (2019). The Economic Impact of the
Biopharmaceutical Industry: U.S. and State Estimates.
\31\ NDP Analytics. (2021). Analysis of the US FDA's Drug
Establishments Current Registration Sit.
\32\ TEConomy Partners. (2019). The Economic Impact of the
Biopharmaceutical Industry: U.S. and State Estimates.
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A Name Behind the Numbers
William Donevant, 71, of Georgetown, SC said, ``[w]e haven't gone
fishing in a while.''\33\ Three years into retirement, he was diagnosed
with a rare cancer. As is too often the situation, his case was hard to
treat. He is in remission thanks to CAR-T-cell therapy, which changes
genetics in the immune system. He now finds happiness in resuming his
life, and in time spent with his granddaughter. ``Without chemotherapy,
it will set me free.''
---------------------------------------------------------------------------
\33\ Birch, J. (2021, June 18). Cancer patients get second chance
at life, thanks to new CAR-T-cell therapy. Retrieved July 29, 2021,
from https://hollingscancercenter.musc.edu/news/archive/2021/06/18/
cancer-patients-get-second-chance-at-life-thanks-to-new-car-t-cell-
therapy.
Policy should not curb the innovation that gets Mr. Donevant his life
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back. It should help him resume activities he loves, like fishing.
Fortunately, there are common-sense, achievable paths forward.
POLICY SOLUTIONS
Americans are blessed with the best medicine in the world. What older
Americans need and deserve is more of it, at lower prices and a quicker
pace. Instead of pursuing a rigid pricing dictate, Congress and the
Administration should adopt practical, achievable strategies for
promoting innovation and lower consumer costs, including:
An out-of-pocket cap for Part D;
Allowing plan sponsors to offer more plan options;
Codifying the insulin demonstration program to lower insulin
prices introduced under President Trump's Administration; and
Modernizing value-based arrangements.
Medicare Part D: The Value of Choice
Created in 2006, Medicare Part D provides seniors access to private,
stand-alone prescription drug plans or Medicare Advantage prescription
drug plans that cover a wide range of medication. Part D is a
bipartisan success story, keeping costs low by empowering patients
through choice and a market-oriented structure, not heavy-handed
bureaucracy. In fact, research finds that Part D's market mechanisms
are responsible for its low costs.\34\ This is exactly the kind of
initiative to which policymakers should look when considering the
affordability of medicines for older Americans. Some practical steps to
modernize Part D would lead to significant gains for patients.
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\34\ Decarolis, F., Polyakova, M., and Ryan, S. P. (2020). Subsidy
Design in Privately Provided Social Insurance: Lessons from Medicare
Part D. Journal of Political Economy, 128(5), 1712-1752, https://
doi.org/10.1086/705550.
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Out-of-Pocket Cap for Part D
Part D beneficiaries pay a monthly premium, an annual deductible, and
copayments or coinsurance. Their relative share of overall costs is
low. The lack of an annual cap on out-of-pocket spending, however, can
expose them to dramatic costs, according to a new analysis. In 2019,
nearly 1.5 million beneficiaries paid above the catastrophic threshold.
Over 3.6 million older Americans faced that hardship in the last
decade.\35\ For seniors, the majority of whom live on fixed incomes,
establishing a reasonable, annual cap on out-of-pocket costs would help
better support their finances and deliver more peace of mind. Enhancing
seniors' access to Part D plans would similarly contribute to lower
overall costs.
---------------------------------------------------------------------------
\35\ Millions of Medicare Part D Enrollees Have Had Out-of-Pocket
Drug Costs High Enough to Exceed the Catastrophic Threshold Over Time.
(2021, July 23). KFF, https://www.kff.org/medicare/press-release/
millions-of-medicare-part-d-enrollees-have-had-out-of-pocket-drug-
costs-high-enough-to-exceed-the-catastrophic-threshold-over-time/.
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Increase Plan Choice for Part D Beneficiaries
Part D works best for seniors because of time-tested principles like
choice, flexibility, and a fair role for the market. Unfortunately,
Obamacare shrunk the number of available Part D plans offered, thereby
curtailing choice by limiting older Americans to only one basic plan
benefit and two enhanced plans per service area. Because of this
arbitrary cap, seniors now lack access to innovative, flexible plans.
Repealing this intrusive regulation would give them more options--plans
that best fit their needs, not the interests of distant bureaucrats,
improving access to medicines. Supporting patients' unique health needs
was also the inspiration for President Trump's cost-cutting insulin
initiative.
Codify the Trump Administration Insulin Demonstration Program
As seniors throughout the country know all too well, diabetes is
becoming an increasingly pressing health challenge. It is affecting
more Americans in recent years. In 2018, 34 million adults (13 percent)
had diabetes--including 27 percent of those aged 65 years and
older.\36\ This impacts costs for many vulnerable seniors. A recent
study found that Part D beneficiaries' spending on insulin products
quadrupled between 2007 and 2017, rising from $236 million to $934
million. While coverage of insulin products varies across Part D plans,
the problem is generally in the coverage gap, which has a coinsurance
rate of 25 percent. This coverage gap pushes out-of-pocket costs for
older Americans as high as $100 per insulin prescription.\37\
---------------------------------------------------------------------------
\36\ Centers for Disease Control and Prevention. National Diabetes
Statistics Report 2020: Estimates of Diabetes and Its Burden in the
United States, https://www.cdc.gov/diabetes/pdfs/data/statistics/
national-diabetes-statistics-report.pdf#page=4.
\37\ Cubanski, J., Neuman, T., True, S., and Damico, A. (2020, June
22). Insulin Costs and Coverage in Medicare Part D. KFF, https://
www.kff.org/medicare/issue-brief/insulin-costs-and-coverage-in-
medicare-part-d/.
Responding to this price spike, President Trump created a voluntary
Part D benefit allowing seniors to access insulin for $35 or less a
month.\38\ Absent this flexibility, they would have to pay much more.
According to the Kaiser Family Foundation, President Trump's program
cut older Americans' insulin costs by almost 30 percent.\39\ This is a
remarkable gain for seniors' mental, physical, and financial well-
being, and policymakers should make it permanent to address their
health needs in a flexible manner. They should also endorse broader
measures to expand flexibility in Medicare, such as value-based
arrangements (VBAs).
---------------------------------------------------------------------------
\38\ Max Richtman. (2020, June 8). Trump's $35 Insulin Plan: A
Nickel Solution to a Billion-Dollar Problem. Morning Consult, https://
morningconsult.com/opinions/trumps-35-insulin-plan-a-nickel-solution-
to-a-billion-dollar-problem/.
\39\ Cubanski, J., Neuman, T., True, S., and Damico, A. (2020, June
22). Insulin Costs and Coverage in Medicare Part D. KFF, https://
www.kff.org/medicare/issue-brief/insulin-costs-and-coverage-in-
medicare-part-d/.
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Modernize Value-Based Arrangements
Traditionally Medicare pays ``fee-for-service.'' It reimburses for each
item or service provided. By incentivizing hospitals, physicians, and
other providers to focus on service quantity over quality, the fee-for-
service model better serves limited health-care access than it does
older Americans. VBAs help address this problem.
VBAs reward providers who focus on quality over quantity. They
prioritize individual care and patient outcomes. They also reduce costs
for taxpayers, no longer on the hook for perverse incentives. By
expanding and modernizing the number of Medicare VBAs, policymakers can
help ensure that seniors are receiving the very best care, at
affordable cost, tailored to their needs.
Reform for the future
``I do hope that when the pandemic is over,'' economist Alex Tabarrok,
a George Mason University health expert, said, ``we don't forget that
for patients with life-threatening diseases, it's always been an
emergency.''\40\
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\40\ Tabarrok, A. (2021b, July 30). Welcome to the Club. Retrieved
August 2, 2021, from https://marginalrevolution.com/marginalrevolution/
2021/07/welcome-to-the-club.html.
Mr. Tabarrok echoes South Carolina's Dorothy Nielsen in this sentiment,
which is worth emphasizing: the Food and Drug Administration's (FDA)
imposition of overbearing standards interferes with access to vastly
more treatments than COVID vaccines. Innovation saves lives, now and in
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the future.
Streamlining the FDA's review process, boosting patient voice in its
decisions, and allowing innovative trial designs will encourage the
growth of lifesaving treatments. It is imperative for Congress and the
administration to constantly search for effective measures that achieve
this kind of regulatory fairness and flexibility--one of the best
possible ways to put patients first.
CONCLUSION
For James Deer, Dorothy Nielsen, and William Donevant, and for so many
older Americans across the country, metrics indicating a higher quality
of life or better life expectancy are not just statistics. They
represent the most valuable resource we have: time--more time to share
with a grandchild, laugh with a spouse, or just go fishing.
Putting patients first by expanding access to quality treatments is and
should be an urgent goal for policymakers. Sharing the medical
innovation miracle's bounty is a moral priority. There are strategies
and paths available to achieve this goal--to help seniors and all
Americans live well, and with dignity--that avoid the pricing pitfalls
of H.R. 3. Quality, affordable treatments can be available for patients
without sharp shortages, diminished innovation, and economic losses.
Policy today can and should effectively support patients, taxpayers,
and the competitive marketplace that has extended and improved so many
lives in the United States. Let us work to diligently legislate
precious time back to ourselves and our loved ones for the chance to
enjoy more tomorrows together.
______
Submitted by Hon. John Thune, a U.S. Senator From South Dakota
CONGRESSIONAL BUDGET OFFICE
U.S. Congress
Washington, DC 20515
Phillip L. Swagel, Director
October 19, 2021
Honorable Jason Smith
Ranking Member
Committee on the Budget
U.S. House of Representatives
Washington, DC 20515
Re: Provisions in Reconciliation Legislation That Would Affect Health
Insurance Coverage of People Under Age 65
Dear Congressman:
This letter responds to your request for information about the
Congressional Budget Office's cost estimates for specified health-care
provisions contained in the reconciliation legislation being considered
by the House of Representatives. The relevant sections would extend
eligibility for and increase the amount of premium tax credits and
cost-sharing reductions available for health insurance through the
marketplaces established under the Affordable Care Act (ACA). They also
would establish a federal Medicaid program for States that have not
expanded Medicaid under the ACA.
The reconciliation process stems from S. Con. Res. 14, the Concurrent
Resolution on the Budget for Fiscal Year 2022, which instructed 13
committees to recommend legislative changes that would affect deficits
over the 2022-2031 period.\1\ As part of that process, the House
Committee on Ways and Means and the House Committee on Energy and
Commerce approved legislation on September 15, 2021. On September 27,
2021, the House Committee on the Budget combined the recommendations of
the committees and reported H.R. 5376, a bill to provide for
reconciliation pursuant to title II of S. Con. Res. 14.
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\1\ Section 2002 of S. Con. Res. 14 instructed 12 committees in the
House of Representatives to recommend legislation that would increase
the deficit by up to $1.975 trillion and instructed the Committee on
Ways and Means to recommend legislation that would decrease the deficit
by at least $1 billion. For more information, see Megan S. Lynch, S.
Con. Res. 14: The Budget Resolution for FY 2022, Report R46893, version
2 (Congressional Research Service, September 1, 2021), https://
go.usa.gov/xMF57.
CBO has not yet completed a cost estimate of H.R. 5376 as a whole. This
letter provides estimates for the provisions in that bill for which you
have requested additional information.
Estimated Federal Costs and Changes in Health Insurance Coverage
You asked how the reconciliation legislation would affect health
insurance coverage for people under age 65. CBO and the staff of the
Joint Committee on Taxation (JCT) have analyzed the following
provisions:
Section 137501--Improve Affordability and Reduce Premium Costs
of Health Insurance for Consumers;
Sections 137504, 137505, and 30701: provisions affecting
coverage for people with low income, particularly those whose income is
below 138 percent of the federal poverty level (FPL)--Temporary
Expansion of Health Insurance Premium Tax Credits for Certain Low-
Income Populations, Ensuring Affordability of Coverage for Certain Low-
Income Populations, and Closing the Medicaid Coverage Gap;
Section 137507--Special Rule for Individuals Receiving
Unemployment Compensation; and
Section 137502--Modification of Employer-Sponsored Coverage
Affordability Test in Health Insurance Premium Tax Credit.
CBO and JCT estimate that enacting those provisions would increase
deficits by $553.2 billion over the 2022-2031 period (see Table 1).
Estimates for all provisions account for interactions with section
137501.
Over the 2022-2031 period, CBO and JCT estimate, enacting the
provisions discussed here would result in a net decline of about 3.9
million people without health insurance. The components of that change
(which do not sum to the total because of rounding) would be as
follows:
4.0 million increase in Medicaid enrollment;
3.6 million increase in subsidized nongroup enrollment;
1.0 million decrease in unsubsidized nongroup enrollment; and
2.8 million decrease in enrollment in employment-based coverage.
CBO and JCT estimate that under the legislation, in 2031, 23.6 million
people under the age of 65 would be uninsured--a reduction from the
current-law total of 27.7 million people.
CBO and JCT classified people who do not have health insurance into
mutually exclusive groups on the basis of the most heavily subsidized
option available to them.
Of those who would be uninsured under the bill's provisions, CBO and
JCT estimate, 24 percent would be eligible for Medicaid or the
Children's Health Insurance Program (CHIP), 18 percent would be
eligible for a premium tax credit with a dollar value greater than zero
through the marketplaces, 30 percent would have access to employment-
based coverage, and the remaining 28 percent would be ineligible for
subsidized coverage.
Background
Since the ACA was enacted, 38 States and the District of Columbia have
expanded Medicaid eligibility to all adults under the age of 65 whose
income is up to 138 percent of the FPL. People generally are not
eligible for subsidies through the health insurance marketplaces under
current law if their income is below 100 percent of the FPL ($12,880
for a single person or $26,500 for a family of four in 2021).
Under current law, people with a modified adjusted gross income between
100 percent and 400 percent of the FPL who are lawfully present in the
United States are eligible for premium tax credits if they are not
eligible for public coverage (through Medicaid or CHIP, for example)
and if they do not have an affordable offer of
employment-based coverage. For 2021 and 2022, however, the American
Rescue Plan Act of 2021--enacted in March 2021--expanded eligibility
for the tax credits to include people whose income is above 400 percent
of the FPL.
Under current law, people can use those credits to lower their monthly
out-of-pocket costs for premiums. The amount is calculated as the
difference between the benchmark premium for health insurance (that is,
the premium for the second lowest cost silver plan available in the
region) and a specified maximum contribution, expressed as a percentage
of income.
For most people, a silver plan pays about 70 percent of the total cost
of covered benefits. (That ``actuarial value'' of the plan would
require enrollees to pay out-of-pocket costs of about 30 percent, on
average). Cost-sharing reductions (CSRs) effectively increase the
actuarial value of silver plans for people whose income is between 100
and 250 percent of the FPL, as follows:
Between 100 percent and 150 percent of the FPL, the actuarial
value increases to 94 percent;
Between 150 percent and 200 percent of the FPL, the actuarial
value increases to 87 percent; and
Between 200 percent and 250 percent of the FPL, the actuarial
value increases to 73 percent.
Because there is no appropriation under current law to pay for CSRs,
most insurers use ``silver loading''--they charge higher premiums for
silver plans offered through the marketplaces.
Basis of Estimate
The provisions considered in this estimate would cause a net increase
in the deficit, as follows:
$209.5 billion under section 137501, Improve Affordability and
Reduce Premium Costs of Health Insurance for Consumers;
$323.1 billion under sections 137504, 137505, and 30701, which
concern coverage for people with low income;
$10.6 billion under section 137507, Special Rule for Individuals
Receiving Unemployment Compensation; and
$10.8 billion under section 137502, Modification of Employer-
Sponsored Coverage Affordability Test in Health Insurance Premium Tax
Credit.
Improve Affordability and Reduce Premium Costs of Health Insurance for
Consumers. Section 137501 would extend the enhanced premium tax credits
provided by the American Rescue Plan Act. For 2023 and beyond, the
legislation would increase subsidies for people whose income is below
400 percent of the FPL and extend eligibility to people whose income is
above that level (see Table 2).
CBO and JCT estimate that section 137501 would increase Federal
deficits by $209.5 billion over the 2022-2031 period as the result of
increased direct spending of $119.7 billion and revenue reductions of
$89.8 billion. Those net effects primarily reflect a $259.0 billion
increase in premium tax credits for health insurance obtained through
the marketplaces partially offset by higher revenues. Those revenues
would increase because taxable wages would increase as employment-based
coverage declines. CBO and JCT estimate that about 10 percent of the
estimated increase in premium tax credits would stem from the
enrollment of people whose income is above 700 percent of the FPL.
CBO and JCT expect that section 137501 would have a twofold effect on
health insurance coverage obtained through the marketplaces. First,
most enrollees who have subsidies under current law would be eligible
for enhanced subsidies that would lower their out-of-pocket costs for
premiums. Second, subsidies would be extended to include some people
who will lose eligibility after 2022 under current law. CBO and JCT
anticipate that, in addition to reducing current enrollees' out-of-
pocket premium costs, the enhanced subsidies would attract more
enrollees to the marketplaces. CBO and JCT estimate that those
additional enrollees would account for $167.2 billion of the increase
in premium tax credits and that current-law enrollees would account for
the remaining $91.8 billion.
CBO and JCT estimate that enacting section 137501 would increase the
number of people who have coverage through the marketplaces by 3.4
million, on average, over the 2022-2031 period. The agencies also
estimate that the income of 65 percent of those who would not have
enrolled without that provision would be above 400 percent of the FPL.
For people whose income is more than 600 percent and 700 percent of the
FPL, those estimates are 20 percent and 10 percent, respectively.
The estimated increase in marketplace enrollment consists of 1.4
million fewer uninsured people, 600,000 fewer people with nongroup
coverage purchased outside of the marketplaces, and 1.6 million fewer
people with employment-based coverage. The estimated reduction in
employment-based coverage is primarily driven by a reduction in offers
as a response to the increased subsidies for coverage through the
marketplaces. CBO and JCT estimate that 200,000 people would enroll in
coverage through Medicaid and CHIP as a result of that reduction in
offers of employment-based coverage.
Provisions Affecting Coverage for People With Low Income. Beginning in
2022, the bill would extend subsidized coverage to people whose income
is below 100 percent of the FPL who otherwise meet eligibility
requirements.
For each year from 2022 to 2024, sections 137504 and 137505 would:
Expand access to subsidized coverage through the marketplaces by
extending eligibility for premium tax credits and CSRs to people whose
income is below 100 percent of the FPL;
Expand eligibility for premium tax credits and CSRs to people
whose income is below 138 percent of the FPL who have access to an
offer of employment-based coverage that is considered affordable under
the ACA;
Modify the subsidy recapture and tax-filing requirements for
people whose income is below 138 percent of the FPL; and
Appropriate funds for outreach and education.
For 2023 and 2024, section 137505 also would increase CSRs for eligible
enrollees whose income is below 138 percent of the FPL from the
current-law actuarial value of 94 percent to 99 percent. Because
funding for CSRs has not been appropriated under current law, most
insurers use silver loading to cover those costs. Under section 137505,
the Federal Government would directly reimburse insurers for a portion
of the cost of CSRs for eligible people whose income was below 138
percent of the FPL in 2023 and 2024. CBO and JCT expect that most
insurers would continue to use silver loading to finance the remaining
costs.
For 2024 only, section 137505 would provide marketplace enrollees whose
income was under 138 percent of the FPL with additional benefits, such
as subsidies for transportation to medical appointments, that currently
are covered by State Medicaid programs but not required for marketplace
plans.
Starting in 2025, section 30701 would establish a federal Medicaid
program to provide coverage to adults whose income is up to 138 percent
of the FPL and who reside in a State that has not expanded its program.
The Secretary of the Department of Health and Human Services would be
required to administer the program through third-party entities and
under contracts with Medicaid managed care organizations. The Federal
program would be required to provide health-care services and enrollee
protections that are consistent with the services and protections
provided to adults residing in States with programs as expanded under
the ACA.
In addition, the section would require States to maintain their
Medicaid expansions or pay the Federal Government an amount
approximately equal to the expenditures associated with maintaining
expansions. That requirement would apply to States that had expanded
their Medicaid programs as of January 1, 2022, but subsequently
terminate those expansions. CBO expects that such a requirement would
cause most States to maintain their expansion programs rather than have
the new Federal program cover their adult residents. As a result, CBO
estimates that over the 2025-2031 period, States that continued their
expansion programs would spend $86.6 billion to operate those programs;
States that terminated their expansion programs would pay the Federal
Government $3.6 billion.
After accounting for the effects of section 137501, CBO and JCT
estimate that enacting sections 137504, 137505, and 30701 would
increase Federal deficits by $323.1 billion over the 2022-2031 period:
An increase in direct spending of $335.6 billion would be partially
offset by an increase in revenues of $12.5 billion. Those effects
reflect a $390.0 billion net increase in Medicaid outlays and $27.2
billion in administrative costs, partially offset by a $75.6 million
net decrease in subsidies for health insurance obtained through the
marketplaces along with other smaller effects.
CBO and JCT estimate that enacting sections 137504, 137505, and 30701
would increase the number of adults who enroll in Medicaid, on average,
by 3.8 million annually over the 2022-2031 period. That increase would
result, on average, in 2.3 million fewer uninsured people per year,
700,000 fewer people with nongroup coverage, and 900,000 fewer people
with employment-based coverage. The estimated effect on the number of
people with employment-based coverage is primarily driven by fewer
people taking up an offer of health insurance coverage.
CBO and JCT estimate that over the 2022-2024 period, during which
eligibility for marketplace subsidies would be extended to people whose
income was below 100 percent of the FPL, enrollment in nongroup
coverage would increase by 2.3 million people annually, on average. The
estimated increase consists of 1.7 million fewer uninsured people,
300,000 fewer people with employment-based coverage, and 200,000 fewer
people enrolled in Medicaid.
After establishment of the Federal Medicaid program, Medicaid
enrollment would increase by 5.6 million, on average over the 2025-2031
period, CBO and JCT estimate. That projected increase consists of an
estimated 6.4 million people enrolling in the Federal Medicaid program
established by section 30701, partially offset by a decrease of 800,000
people enrolled in State-expanded Medicaid programs. The estimated
reduction is associated with CBO's expectation that States that would
have expanded after 2021 (according to the agency's baseline
projections) would not do so and that few States that already have
expanded would terminate their expansions once the Federal program was
implemented. CBO and JCT expect that people in those States would
instead enroll in the Federal Medicaid program. According to CBO and
JCT's estimates, the net increase in Medicaid enrollment would result
in 2.5 million fewer people being uninsured, 1.9 million fewer people
having nongroup coverage, and 1.1 million fewer people with employment-
based coverage.
Special Rule for Individuals Receiving Unemployment Compensation. Under
current law, eligible people may receive a premium tax credit for
health insurance through the marketplaces that equals the difference
between the benchmark premium and a maximum contribution specified as a
percentage of household income. (CBO and JCT estimated the effects of
section 137507 relative to section 137501; for the maximum income
contribution percentages for 2031 under section 137501, see Table 2 at
the end of this estimate.)
Section 137507 would increase the amount of the premium tax credit for
people who receive unemployment benefits for any length of time in a
year between 2022 and 2025. Under that provision, people whose
household income was above 100 percent of the FPL after excluding
unemployment benefits, and who are otherwise eligible for premium tax
credits, would receive the same credit available to them if their
income was 150 percent of the FPL in the year they receive unemployment
benefits.
After accounting for the effects of section 137501, CBO and JCT
estimate that section 137507 would increase Federal deficits by $10.6
billion over the 2022-2031 period as a result of an increase in outlays
of $4.9 billion and a decrease in revenues of $5.7 billion. Those
effects would stem primarily from the increase in premium tax credits
for health insurance obtained through the marketplaces.
CBO and JCT estimate that 2.0 million people receiving unemployment
compensation would be eligible for enhanced premium tax credits under
section 137507 if they meet other eligibility requirements. The
agencies estimate that, on average in each year from 2022 to 2025,
roughly 500,000 people who already would be expected to enroll in
marketplace coverage under section 137501 would receive an increased
subsidy under section 137507. CBO and JCT estimate that, on average,
about 500,000 people would newly enroll and receive a premium tax
credit if section 137507 was enacted. The agencies estimate that most
of those people would have otherwise been uninsured.
Modification of Employer-Sponsored Coverage Affordability Test. Section
137502 would modify the criteria used to determine an affordable offer
of employer-sponsored health insurance for purposes of premium tax
credit eligibility. Under current law, unaffordable offers are those
that require employees to contribute more than 9.5 percent of their
income (indexed annually for inflation) for self-only coverage. Section
137502 would modify that affordability threshold from an indexed 9.5
percent to a nonindexed 8.5 percent of income. If an employee's
contribution exceeded 8.5 percent of household income, they and their
dependents would be able to purchase subsidized coverage through the
marketplaces.
After accounting for the effects of section 137501, CBO and JCT
estimate that enacting section 137502 would increase Federal deficits
by $10.8 billion over the 2022-2031 period as a result of an increase
in outlays of $12.1 billion and an increase in revenues of $1.2
billion. Those effects would stem primarily from an increase in premium
tax credits for health insurance obtained through the marketplaces,
partially offset by higher revenues stemming from higher taxable wages
that would result from a reduction in employment-based coverage.
CBO and JCT estimate that, on average over the 2022-2031 period,
300,000 more people would enroll in nongroup coverage under the
section. That increase consists of estimated reductions of fewer than
100,000 people without insurance and fewer than 300,000 people with
employment-based coverage. The estimate of the reduction in employment-
based coverage is driven primarily by the expectation that fewer people
would take up an employment-based offer. Those choosing to take up
nongroup coverage instead would do so because the premium tax credits
for plans available through the marketplaces would make those plans
less expensive than employment-based plans.
I hope this information is useful to you.
Sincerely,
Phillip L. Swagel
Director
cc: Honorable John Yarmouth
Chairman
Committee on the Budget
Identical letters sent to the Honorable Kevin Brady, Ranking Member,
Committee on Ways and Means; the Honorable Cathy McMorris Rodgers,
Ranking Member, Committee on Energy and Commerce; and the Honorable
Virginia Foxx, Ranking Member, Committee on Education and Labor.
Table 1. Estimated Budgetary Effects of Provisions in Reconciliation Legislation That Would Affect Health Insurance Coverage for People Under Age 65
By Fiscal Year, Millions of Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2022-2026 2022-2031
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increases or Decreases (-) in Direct Spending
Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
Budget 1,463 19,949 12,519 11,521 11,110 10,867 11,347 12,199 13,815 14,939 56,562 119,729
Authority
Estimated 1,463 19,949 12,519 11,521 11,110 10,867 11,347 12,199 13,815 14,939 56,562 119,729
Outlays
Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
Budget 8,330 16,942 17,055 27,433 36,562 39,003 44,334 47,456 48,488 50,034 106,322 335,637
Authority
Estimated 8,330 16,942 17,055 27,433 36,562 39,003 44,334 47,456 48,488 50,034 106,322 335,637
Outlays
Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
Budget 1,309 1,821 1,419 1,139 -778 0 0 0 0 0 4,910 4,910
Authority
Estimated 1,309 1,821 1,419 1,139 -778 0 0 0 0 0 4,910 4,910
Outlays
Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
Budget 671 1,824 1,493 1,264 982 1,060 950 1,276 867 1,672 6,234 12,059
Authority
Estimated 671 1,824 1,493 1,264 982 1,060 950 1,276 867 1,672 6,234 12,059
Outlays
Interactionsa
Budget -131 -176 -95 -53 40 0 0 0 0 0 -415 -415
Authority
Estimated -131 -176 -95 -53 40 0 0 0 0 0 -415 -415
Outlays
Total Changes in Direct Spending
Budget 11,642 40,360 32,391 41,304 47,916 50,930 56,631 60,931 63,170 66,645 173,613 471,920
Authority
Estimated 11,642 40,360 32,391 41,304 47,916 50,930 56,631 60,931 63,170 66,645 173,613 471,920
Outlays
Increases or Decreases (-) in Revenues
Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
Total Revenues 499 197 -9,761 -9,518 -9,068 -10,529 -11,408 -12,367 -13,259 -14,592 -27,651 -89,806
On-budget 332 -275 -10,640 -10,790 -10,464 -12,018 -12,991 -14,080 -15,101 -16,517 -31,837 -102,544
Revenues
Off-budget 167 472 879 1,272 1,396 1,489 1,583 1,713 1,842 1,925 4,186 12,738
Revenues
Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
Total Revenues 53 -1,586 -3,560 -1,908 3,105 3,211 3,224 3,243 3,315 3,399 -3,896 12,496
On-budget -28 -1,819 -3,824 -2,753 2,037 2,143 2,152 2,160 2,211 2,277 -6,387 4,556
Revenues
Off-budget 81 233 264 845 1,068 1,068 1,072 1,083 1,104 1,122 2,491 7,940
Revenues
Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
Total Revenues 21 -916 -1,645 -1,566 -1,577 2 2 0 0 0 -5,683 -5,679
On-budget 10 -944 -1,683 -1,615 -1,592 2 2 0 0 0 -5,824 -5,820
Revenues
Off-budget 11 28 38 49 15 0 0 0 0 0 141 141
Revenues
Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
Total Revenues 106 159 -170 -120 83 174 137 241 128 474 58 1,212
On-budget 52 -71 -457 -390 -178 -80 -126 -56 -206 59 -1,044 -1,453
Revenues
Off-budget 54 230 287 270 261 254 263 297 334 415 1,102 2,665
Revenues
Interactions a
Total Revenues -4 119 152 103 103 0 0 0 0 0 473 473
On-budget -2 123 156 106 104 0 0 0 0 0 487 487
Revenues
Off-budget -2 -4 -4 -3 -1 0 0 0 0 0 -14 -14
Revenues
Total Changes in 675 -2,027 -14,984 -13,009 -7,354 -7,142 -8,045 -8,883 -9,816 -10,719 -36,699 -81,304
Revenues
On-budget 364 -2,986 -16,448 -15,442 -10,093 -9,953 -10,963 -11,976 -13,096 -14,181 -44,605 -104,774
Revenues
Off-budget 311 959 1,464 2,433 2,739 2,811 2,918 3,093 3,280 3,462 7,906 23,470
Revenues
Net Increases or Decreases (-) in the Deficit
Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
Effect on the 964 19,752 22,280 21,039 20,178 21,396 22,755 24,566 27,074 29,531 84,213 209,535
Deficit
On-budget 1,131 20,224 23,159 22,311 21,574 22,885 24,338 26,279 28,916 31,456 88,399 222,273
Deficit
Off-budget -167 -472 -879 -1,272 -1,396 -1,489 -1,583 -1,713 -1,842 -1,925 -4,186 -12,738
Deficit
Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
Effect on the 8,277 18,528 20,615 29,341 33,457 35,792 41,110 44,213 45,173 46,635 110,218 323,141
Deficit
On-budget 8,358 18,761 20,879 30,186 34,525 36,860 42,182 45,296 46,277 47,757 112,709 331,081
Deficit
Off-budget -81 -233 -264 -845 -1,068 -1,068 -1,072 -1,083 -1,104 -1,122 -2,491 -7,940
Deficit
Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
Effect on the 1,288 2,737 3,064 2,705 799 -2 -2 0 0 0 10,593 10,589
Deficit
On-budget 1,299 2,765 3,102 2,754 814 -2 -2 0 0 0 10,734 10,730
Deficit
Off-budget -11 -28 -38 -49 -15 0 0 0 0 0 -141 -141
Deficit
Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
Effect on the 565 1,665 1,663 1,384 899 886 813 1,035 739 1,198 6,176 10,847
Deficit
On-budget 619 1,895 1,950 1,654 1,160 1,140 1,076 1,332 1,073 1,613 7,278 13,512
Deficit
Off-budget -54 -230 -287 -270 -261 -254 -263 -297 -334 -415 -1,102 -2,665
Deficit
Interactions a
Effect on the -127 -295 -247 -156 -63 0 0 0 0 0 -888 -888
Deficit
On-budget -129 -299 -251 -159 -64 0 0 0 0 0 -902 -902
Deficit
Off-budget 2 4 4 3 1 0 0 0 0 0 14 14
Deficit
Total Effect on 10,967 42,387 47,375 54,313 55,270 58,072 64,676 69,814 72,986 77,364 210,312 553,224
the Deficit
On-budget 11,278 43,346 48,839 56,746 58,009 60,883 67,594 72,907 76,266 80,826 218,218 576,694
Deficit
Off-budget -311 -959 -1,464 -2,433 -2,739 -2,811 -2,918 -3,093 -3,280 -3,462 -7,906 -23,470
Deficit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Data sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
a Estimates for all provisions account for interactions with Section 137501; the estimated interaction effects between other provisions are shown in
this line.
Table 2. Comparison of Maximum Household Contributions for Premium Tax Credits in 2031
----------------------------------------------------------------------------------------------------------------
Percent of Income
Percentage of Federal Poverty Limit -------------------------------------------------------------------------
Under Current Lawa Under Section 137501
----------------------------------------------------------------------------------------------------------------
100-133 2.1 0
133-150 3.1 to 4.2 0
150-200 4.2 to 6.6 0 to 2.0
200-250 6.6 to 8.5 2.0 to 4.0
250-300 8.5 to 10.0 4.0 to 6.0
300-400 10.0 6.0 to 8.5
400+ n.a. 8.5
----------------------------------------------------------------------------------------------------------------
Data source: Congressional Budget Office.
n.a. = not applicable.
a Reflects CBO's current-law estimate of the maximum income contributions in 2031.
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
Senate Democrats are on the cusp of moving major legislation that
will transform American health care, helping consumers get relief from
getting clobbered at the pharmacy window, promoting innovations, and
delivering quality, cost-effective home and community-based services to
older people and people with disabilities. As we look to these exciting
future developments, today the committee will examine the state of
health-care coverage in America.
Health care in America got far better the day that the Affordable
Care Act eliminated the insane and insidious discrimination against
those with preexisting health conditions. In one fell swoop, that
change brought security to millions of people who otherwise worried
that if they or a loved one had a condition like diabetes, there would
be no quality, affordable coverage available to them. The Affordable
Care Act significantly advanced the proposition that health care is a
human right, but Americans who still lack insurance coverage cannot
exercise that right fully.
I'm thrilled that the committee is joined this morning by Senator
Reverend Warnock, who has become the conscience of the Senate on this
issue. He was a crusader for health care long before he was a member of
the Senate. His home State of Georgia is one of a handful of States
where Republican leaders have blocked the expansion of Medicaid.
Instead of getting health coverage to many of the most vulnerable
people in their States, they are clinging to a decade-old political
grudge against the Affordable Care Act. It is a morally bankrupt
choice.
That's one aspect of the health coverage challenge the committee
will discuss today. The committee will also talk about building on what
worked in the response to COVID-19.
Earlier this year, reversing course on a Trump administration
policy that made it harder for people to get health care during a
pandemic, President Biden announced a special enrollment period for
health insurance so that people who'd lost their jobs could get
covered. It was a lifeline for people who needed health-care security
during the pandemic, and nearly 3 million people signed up for
coverage. As part of the American Rescue Plan that passed in March,
Democrats in Congress made signing up for insurance much more
affordable by expanding the ACA's tax credits for health-care premiums.
All in all, consumers who updated their health coverage during the
special enrollment period are saving on their net monthly premiums by
an average of 40 percent. Nearly two out of three consumers can get a
plan with zero premium, after tax credits. Extending those
improvements, in my view, is a no-brainer. It's a way to improve health
coverage and put money back in Americans' pockets at the same time.
In addition to expanding insurance coverage, today's hearing is
also an opportunity to discuss how Medicare, while a lifeline for tens
of millions, still has key gaps in what it covers. For example,
Democrats are working on updating the Medicare guarantee to cover
dental care, vision, and hearing for seniors. It's just unthinkable
that there are seniors on Medicare, people who've worked hard for a
lifetime and done everything right, who can't afford teeth cleaning,
eyeglasses, or a hearing aid. Similarly, this committee is working on a
plan to allow seniors and people with disabilities to get the care they
need in the place where they're most comfortable, at home.
Before I wrap up, I also want to briefly address some of the key
facts that have been distorted in health-care debates. None of the
plans I've talked about will reduce the solvency of Medicare's hospital
insurance trust fund at all--not one bit. Those benefits will have
different sources of funding. They will not be part of Medicare Part A,
which is what the trust fund covers.
History shows Republicans trot out this insolvency argument every
time Democrats propose significant improvements to our Federal health-
care programs--and it's never true. The Affordable Care Act extended
the solvency of Medicare by 12 years, but Republican political
campaigns falsely claimed it would do the opposite. They continued to
make that claim even after it was fully, repeatedly debunked.
Republican Senators' stated concern over Medicare didn't stop them
from attempting to repeal the ACA, which would have devastated
Medicare's finances had they succeeded. The Trump tax law even reduced
payments into Medicare's trust fund.
Shoring up the Medicare hospital insurance trust fund ought to be a
bipartisan proposition in order to guarantee that seniors continue
receiving the benefits they've earned. That would require Republicans
to stop using solvency as a political weapon, creating yet another
artificial, unnecessary crisis.
The record shows that Democrats have worked again and again to
improve Medicare's finances while upholding its promise of guaranteed
benefits for seniors. In campaign ads and in the Congress, Republicans
have done just the opposite.
So there's a lot for us to discuss today. I'm expecting a lively
hearing. Once again, I want to thank our friend Senator Reverend
Warnock for being here along with all our witnesses. I'm looking
forward to Q&A.
______
Communications
----------
Americans for Prosperity
Senator Wyden, Senator Crapo, and distinguished members of the
Committee, thank you for giving Americans for Prosperity this
opportunity to submit our views on how best to improve health care and
coverage in the United States.
AFP's Health Care Vision
Americans for Prosperity is a national, grassroots activist
organization whose thousands of members across the country work to
empower every person to earn success, contribute to his or her
community, and live a productive, meaningful life. Among many other
projects, we work to create a health-care system that continuously
delivers better care at lower cost through markets, not mandates. That
means a system in which doctors, nurses, and hospitals are free to
compete and offer the best health-care products and services at the
best prices that meet the needs of their patients. We call this vision
a ``personal option,'' and in this submission for the record, we would
like to outline some of the principles and reforms we believe are
essential to making it a reality.\1\
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\1\ https://americansforprosperity.org/personal-option/.
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The Status Quo
When it comes to health-care reform, Americans have historically been
cautious, preferring incremental over radical change. That is still
true today. Our polling finds 75 percent of Americans are generally
satisfied with their current health-care arrangements, and a similar
percentage of Americans are not in the market for major changes or
disruptions, preferring instead to fix what's broken in our system
while preserving what works.\2\
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\2\ https://americansforprosperity.org/voters-want-more-choice-
control-health-care-survey/.
And what works? For one thing, the quality of care. The quality of
American health care is generally very high. In many respects, it's the
best in the world. Our cancer survival rates, for example, are good \3\
and continuously getting better. We also tend to have shorter surgery
wait-times.\4\
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\3\ https://www.healio.com/news/hematology-oncology/20180131/us-
cancer-survival-rates-remain-among-highest-in-world.
\4\ https://fee.org/articles/america-outperforms-canada-in-surgery-
wait-times-and-its-not-even-close/.
For another thing, access to basic coverage. Universal coverage has
been effectively achieved in the United States. That's right. Some 98
percent of Americans today are either covered by or eligible for some
form of comprehensive, government-subsidized health insurance. While
about 9 percent of Americans are officially uninsured, 7 percentage
points of that group are eligible for public or private insurance but
simply not enrolled. Just 2 percent of Americans are truly
uninsured.\5\
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\5\ https://www.kff.org/uninsured/issue-brief/key-facts-about-the-
uninsured-population/.
And yet, for all its strengths and marvels, our system is not perfect.
It is notoriously too costly and too complicated. It provides too
---------------------------------------------------------------------------
little price transparency and too many negative surprises for patients.
We believe these flaws arise because, in our country, patients are
treated more like products than customers. Too many important decisions
are made for patients instead of by them. We cater too much to
insurance companies and government bureaucracies and not enough to the
true end-users of care and the medical professionals they trust.
Why do these problems exist? Because a number of well-meant but
misguided government policies shift power and responsibility from
patients to third parties, principally in the tax code, but also in the
structure and incentives of various government programs. The remedy
seems fairly obvious: reform these policies to shift power back to
patients.
By making health care more like other markets, where the end-user
controls the dollars and the essential decisions, we can increase
choice and competition, and thus the quality and the abundance of
medical goods and services, and thus the health and happiness of
patients and their families.
To put it more succinctly, we must empower patients to act as
customers, and remove the barriers standing between them and their
doctors. This is the formula for success. This is how we fix what's
broken and preserve what works.
What do we Americans want from our health-care system? Based on our
polling and conversations with voters, it's clear that we Americans
want:
Good insurance at an affordable price.
Access to the latest life-saving drugs at a reasonable price.
To see the doctor of our choice, conveniently and affordably.
To know how much our care will cost, up front, before we pay for
it.
The choice to try experimental treatments.
And strong government safety nets that protect the vulnerable.
In a nutshell, we want a personal option. A personal option gives
people the choice and control they want, with the quality they deserve,
at prices they can afford, from the medical professionals they trust.
Solution: A Personal Option
So how do we get there? What reforms are needed?
Help People, Not Insurance Companies
Health care exists for patients. Government health insurance assistance
should go directly to patients, rather than to insurance companies,
similar to the way food stamps go directly to low-income families
rather than to farmers or food producers. Congress should adopt more
voucher-like approaches to existing health insurance subsidies,
including Medicaid, Medicare, and the Affordable Care Act. It could,
for example, start by adopting such an approach to fill in the so-
called Medicaid coverage gap, the 2 million or so individuals who live
in States that have not expanded Medicaid and who are not eligible for
any form of government-subsidized health insurance. We could take some
of the money we currently spend on Medicaid and deposit it directly
into a tax-free Health Savings Account owned and controlled by the
enrollee. Congress would require that this assistance be used to pay
for health insurance premiums and legitimate out-of-pocket expenses,
but would not otherwise dictate how the recipient uses the funds. This
approach would be more compassionate than current, top-down subsidy
structures because it would be more efficient and dignified for the
recipient.
Promote Price Transparency
In every market, consumers get to see the price up front--except in
health care. We would never tolerate this at the gas station or grocery
store. Unable to shop for value, patients grope in the dark and get hit
with excessive charges and pay for needless middlemen and waste. Health
care costs will not come down until we can see real prices. But how to
get there? Some people favor top-down government mandates, forcing
hospitals, insurers, and drugmakers to publish their list prices and
their privately negotiated rates. The Trump Administration tried to do
so through aggressive regulatory actions. While we strongly support
price transparency, we do not believe a mandatory approach will
actually help consumers in the long run. The only sure path to price
transparency is to empower consumers to make the important purchasing
decisions. When consumers are spending their own money, they shop for
value, and prices become transparent naturally--just as they do at the
gas station and the grocery store. A good place to start is to expand
and strengthen special accounts that patients can use to save and pay
for health care, tax-free. Such accounts help level the tax code
playing field, effectively giving consumers the same kind of generous
tax break for health care and coverage purchases that currently only
employers receive.
Expand and Strengthen Tax-Free HSAs
Tax-free Health Savings Accounts help 30 million American families pay
their out-of-pocket medical expenses tax-free. Why not every family? An
HSA is a tool that saves you anywhere between 10 to 40 percent off,
each time you make a health-care purchase. And it gives you greater
control of your medical decisions. Studies show HSAs help reduce
health-care costs.\6\, \7\, \8\ Expanding this
option is a prime way to put consumers in the driver's seat and bend
the health-care cost curve downward. Unfortunately, today only about 10
percent of Americans are able to have an HSA, because the law requires
HSA owners to buy a narrowly defined, high-deductible health plan or
HDHP. By removing this needless restriction, we can allow all Americans
to save for health care, tax-free. It would also be desirable to
significantly increase how much people can save in these accounts, as
well as the array of items and coverage options they can buy with them,
including, for example, direct primary care subscriptions and health
insurance premiums. Examples of good bills that include these kinds of
reforms include Senator Rubio's and Senator Tim Scott's Health Savings
Act (S. 380, 2021), Senator Cruz's Personalized Care Act (S. 153,
2021), and Senator Paul's Health Savings Accounts for All Act (S. 4367,
2020).
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\6\ https://www.nber.org/papers/w21031.
\7\ https://www.actuary.org/sites/default/files/pdf/health/
cdhp_may09.pdf.
\8\ file:///C:/Users/DClancy/OneDrive%20-%20Stand%20Together/
dean%20files/policy/hc/hc%20-%20payment%20-%20decentralized%20-
%20tax%20-%20hsa/hsa%20-%20studies%20etc/
HSA%20effect%202019%20PA%20study.pdf.
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Strengthen Individual Coverage HRAs
Current policy allows employers to set up, and employees to benefit
from, special spending accounts known as individual coverage health
reimbursement arrangements or ICHRAs. In addition to facilitating
employees' out-of-pocket purchases using pre-tax dollars, these
innovative accounts also enable employees to use tax-free money from
their employer to buy health insurance that is personally owned and
portable. This is a godsend, including for patients with costly pre-
existing medical conditions. Thanks to ICHRAs, employees can now have
the peace of mind that comes from knowing that they don't have to lose
their health insurance coverage when they change jobs. Congress should
reject efforts to eliminate or water down ICHRAs, and should facilitate
educational efforts to increase employers' awareness and use of this
exciting option.
Reduce Mandates to Make Health Insurance Affordable
Insurance today is often a poor value for money. Thanks to well-meant
but misguided mandates, federal and state, premiums in recent years
have doubled, deductibles have tripled, and access to doctors and
hospitals has dramatically narrowed. Happily, with some sensible
insurance reforms we can reverse these harmful trends and actually
bring down premiums while preserving protections for people with pre-
existing conditions. Specifically, Congress should repeal costly,
frivolous benefit mandates and ease or eliminate age-based community-
rating price controls, so that more young, healthy people sign up
voluntarily.
Reduce Hospital Market Consolidation
Hospital services represent about 40 percent of all health expenditures
in the United States. In recent years, hospital market consolidation
has accelerated, reducing choice and quality, driving up prices, and
tilting the playing field against physicians. Addressing and reversing
this troubling trend requires legislative, judicial, and regulatory
action, including modifications of antitrust laws, or at least
modifications of their specific application. But there are other policy
reforms that can help to reduce hospital market consolidation, and thus
to improve the cost, quality, and abundance of hospital services.\9\
Such reforms include the repeal of local certificate of need laws and
reforms of Medicare to provide for site-neutral payments and an end to
the moratorium on physician-owned hospitals. The latter two reforms are
discussed more specifically, below.
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\9\ https://www.heritage.org/health-care-reform/report/how-
congress-can-help-reverse-hospital-market-consolidation.
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Lift the Federal Moratorium on Physician-Owned Hospitals
Section 6001 of the Affordable Care Act places an effective moratorium
on participation in Medicare for new and expanded physician-owned
hospitals (POH).\10\ This prohibition is unjustified and should be
repealed. Studies show that it unduly and needlessly limits competition
and increases costs. For example, a recent literature review finds,
among other things, that orthopedic and cardiac ``focused factory''
POHs offer consumers comparable or lower costs and higher quality care
compared to other hospitals; patients with a wide range of serious
conditions experience lower in-hospital and 30-day mortality rates in
specialty POHs; patients with orthopedic conditions receive a greater
number of conservative preoperative therapies prior to invasive
procedures and experience shorter stays and lower risk-adjusted
complication rates; general surgery POHs offer higher quality services
compared to their competitors; and the cost and quality of general
acute care POHs is not inferior to competitors.\11\
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\10\ https://www.healthaffairs.org/do/10.1377/hblog20210408.980640/
full/.
\11\ https://www.mercatus.org/publications/healthcare/cost-and-
quality-care-physician-owned-hospitals-systematic-review.
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Move to Site-Neutral Payment in Medicare
Medicare payment structures are built around the kind of facility in
which care is delivered, rather than how efficiently and effectively it
is delivered. Congress should move to site-neutrality, so that the
Medicare payment for a medical service is the same whether it is
delivered in a physician's office, a clinic, or a hospital setting. The
Centers for Medicare and Medicaid Services issued a rule to accomplish
site-neutrality on a limited basis.\12\ Congress should codify this
site-neutrality policy and expand it to level the playing field among
providers and remove the financial disabilities for medical
professionals who would compete with hospital systems.
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\12\ https://www.govinfo.gov/content/pkg/FR-2019-11-12/pdf/2019-
24138.pdf.
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Modernize Medicare
Medicare is a popular but expensive and in critical ways outdated
insurance product that fails to protect seniors from catastrophic costs
and negatively distorts health-care markets. We can do better by
America's elderly and disabled citizens. Reform need not be partisan or
polarized. There are incremental reforms that modernize and strengthen
Medicare to give seniors more freedom and better access to doctors and
therapies at lower cost. Because the private, competitive Medicare
Advantage option often offers superior service with extra benefits at
no or low out-of-pocket cost, more than 43 percent of Medicare
enrollees have voluntarily opted into it. To increase competition
within Medicare, we believe all new Medicare enrollees should be auto-
enrolled into an affordable Medicare Advantage plan in their area, with
a right to opt into original, fee-for-service Medicare if they wish. To
increase competition within the over-65 market more generally, we
believe seniors should be allowed to choose private coverage in lieu of
Medicare without penalty, with reasonable policies to govern how and
when they can opt back in, if they wish. Senator Braun's Fair Care Act
(S. 4796, 2020) includes a provision to do just that, as does Senator
Cruz's Retirement Freedom Act (S. 275, H.R. 1166, 2021). We also
endorse Representative Latta's Stop Penalizing Working Seniors Act
(H.R. 5563, 2021), which enable seniors enrolled only in Medicare Part
A to save for and pay out-of-pocket health-care costs, tax-free,
through a personally owned and controlled Health Savings Account.
Make Medicaid Reform a National Priority
If there's something both sides of the aisle ought to be able to agree
on, it's that we must eliminate waste in federal programs. Medicaid's
improper payment rate has ballooned from 9 percent in 2018 to nearly 15
percent in 2019 and all the way to 21 percent in 2020--possibly as high
as 25 percent. Officially, Medicaid wastes on the order of $70 billion
a year--enough to pay for health care for 12 million adults or 3.6
million disabled Americans for an entire year.\13\ Unofficially, the
program probably wastes in excess of $100 billion a year. About 80
percent of these improper payments are due to payments to ineligible
persons.\14\ Meanwhile, the quality of care delivered by Medicaid has
long been known to be inferior. Clearly, this broken program cries out
for reform. Medicaid was never meant to be a middle-class entitlement
that displaces private insurance options and busts the federal budget.
It was meant to be a safety net. Congress should reform it to keep it
focused on those who truly need help paying for health care. Congress
should also help the working poor by using some of the money we
currently spend on Medicaid as direct deposits into tax-free HSAs for
low-income families.
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\13\ https://thehill.com/blogs/congress-blog/healthcare/568825-
medicaids-improper-payments-show-why-the-program-needs-reform.
\14\ https://nypost.com/2020/11/28/medicaid-hemorrhaging-100b-on-
americans-ineligible-for-the-program/.
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Unleash the Potential of Telehealth
Telehealth technologies empower health professionals to remotely
consult, diagnose, and treat patients without meeting in-person.
Providers can safely and effectively deliver an array of health
services through telehealth including primary care, mental health
services, and emergency care. Patients can connect with health-care
workers through a variety of telehealth technologies including video
conference apps, remote monitoring devices, instant messages, and audio
phone calls. The pandemic has dramatically revealed how telemedicine
can reduce costs and infections and ensure that people, especially in
underserved rural and urban communities, can access health care in a
timely manner. Prior to the COVID-19 pandemic, only 134,000 Medicare
enrollees received virtual care every week. After the pandemic
emergency reforms took effect, the number of enrollees receiving
telehealth increased to 10.1 million, roughly one-third of all fee-for-
service Medicare enrollees. Overall, Medicare enrollees purchased eight
percent fewer primary care services between January and June 2020.\15\
From February to December 2020, the number of telehealth services
delivered to privately insured patients increased over 1,500 percent.
As a share of all health-care services, virtual care increased from one
percent to 21 percent during this period. Expanding access to
telehealth lowers health-care spending by providing patients a low-cost
alternative to expensive in-person care. The popular telehealth
platform Teladoc reports the average telehealth consultation costs just
$40. By comparison, the typical cost of an in-person primary care visit
is $160. Virtual care also reduces costs by helping patients avoid
expensive hospitalizations. Ascension Health, America's 2nd largest
hospital system, found 60 percent of its telehealth patients would have
visited an urgent care clinic or emergency room if they did not offer
virtual care. This decreased costly outpatient services by 33 percent
for Ascension's patients.\16\ Unfortunately, these important reforms
are limited to the COVID-19 public health emergency. As soon as state
and federal officials declare the pandemic over, these harmful
telehealth barriers will resume and patients will lose access to
essential virtual care.
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\15\ http://www.medpac.gov/docs/default-source/reports/
mar21_medpac_report_ch14_sec.pdf?s
fvrsn=0.
\16\ https://connectwithcare.org/wp-content/uploads/2020/08/
Ascension-Telehealth-Data.pdf.
1. Remove barriers on patient locations. Under changes implemented by
the CARES Act, CMS authorized health-care providers to deliver care to
patients located in any zip code and setting, including their home.\17\
Prior to this reform, patients could only receive telehealth services
from select health-care facilities in rural areas.
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\17\ https://www.cms.gov/newsroom/fact-sheets/medicare-
telemedicine-health-care-provider-fact-sheet.
2. Remove barriers on provider locations. Under the CARES Act, CMS
announced that health-care practitioners can deliver telehealth from an
expanded array of facilities, including Federally Qualified Health
Centers, Rural Health Centers, and their own homes.\18\
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\18\ https://www.cms.gov/files/document/covid-rural-health-
clinics.pdf.
3. Expand the list of telehealth services. Starting March 1, 2020, CMS
announced that health professionals can deliver approximately 240
additional telehealth services to Medicare recipients, including mental
health consultations, home health visits and emergency care.\19\
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\19\ https://www.cms.gov/Medicare/Medicare-general-information/
telehealth/telehealth-codes.
4. Expand the list of telehealth providers. Prior to COVID-19, federal
law authorized only nine types of health-care providers to deliver
telehealth services.\20\ Fortunately, the agency expanded the list of
telehealth provider-types to include all practitioners who are
currently authorized to deliver in-person care to Medicare recipients,
including physical therapists, occupational therapists, and speech
language pathologists.\21\
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\20\ https://www.law.cornell.edu/cfr/text/42/410.78.
\21\ https://www.cms.gov/files/document/summary-covid-19-emergency-
declaration-waivers.pdf.
5. End technology restrictions on telehealth. Under the Cares Act, CMS
authorized practitioners to deliver telehealth through audio-only phone
calls.\22\ In addition, the Office for Civil Rights (OCR) issued
guidance allowing health-care providers to deliver telehealth through
any non-public facing telecommunication platform, including Zoom, Apple
FaceTime, and Skype.\23\
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\22\ https://www.cms.gov/files/document/covid-19-emergency-
declaration-waivers.pdf.
\23\ https://www.hhs.gov/hipaa/for-professionals/special-topics/
emergency-preparedness/notification-enforcement-discretion-telehealth/
index.html.
6. Allow telehealth across state lines. Prior to COVID-19, federal law
prohibited health-care practitioners from delivering telehealth to
patients across state lines.\24\ Fortunately, CMS issued a waiver
allowing health-care providers to deliver telehealth in States that
explicitly authorize out-of-state providers to provide virtual care
without an additional license.\25\
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\24\ https://www.law.cornell.edu/cfr/text/42/410.78.
\25\ https://www.cms.gov/files/document/summary-covid-19-emergency-
declaration-waivers.pdf.
7. Empower insurers to offer comprehensive telehealth coverage. Before
COVID-19, federal law prohibited insurers from waiving deductibles for
telehealth services for individuals with high-deductible health plans
(HDHPs). Fortunately, the CARES Act allows insurers to offer telehealth
services free of deductibles for individuals covered by these
plans.\26\
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\26\ https://www.congress.gov/116/plaws/publ136/PLAW-
116publ136.pdf.
Examples of positive legislation in this area include Sen. Manchin's
Protecting Rural Telehealth Access Act (S. 1988, 2021), Senator Tim
Scott's Telehealth Modernization Act (S. 368, 2021), and Senator
Schatz's CONNECT for Health Act of 2021 (S. 1512, 2021).
Allow Association Health Plans
Letting individuals and businesses band together to buy affordable
coverage at group rates should be a no-brainer. Large businesses get
such discounts, why not small businesses as well? Unfortunately, a
federal court recently ruled that the U.S. Department of Labor does not
have authority to clarify existing rules to permit AHPs federally.
Therefore, congressional clarification is needed. Examples of good
bills to do so include Senator Kennedy's Association Health Plans Act
(S. 896, 2021) and Senator Paul's American Healthshare Plans Act (S.
3610, 2020).
Allow ``Truth in Medicine''
The U.S. Food and Drug Administration imposes a speech restriction on
drug manufacturers barring the sharing of scientific information with
doctors about possible uses of drugs outside the current limits of the
drugs' labeling--even when the information is truthful, non-misleading,
and potentially life-saving. Congress should rescind this harmful gag
rule.\27\
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\27\ https://goldwaterinstitute.org/free-speech-in-medicine/.
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Speed Up FDA Drug Approvals
The pandemic and Operation Warp Speed have shown that a speedier FDA
gets more life-saving drugs and medicines to people more quickly. It
takes 10 to 15 years and $2.6 billion on average to bring a new drug to
market.\28\ Some drugs are approved in the United States only many
years after they were approved overseas. Patients suffer and die
needlessly. We can reduce this needless suffering and expense without
harming patients by requiring FDA to recognize drugs and devices that
have been approved by advanced countries we trust. Senator Cruz's
RESULTs Act (S. 154, 2021) would do just that. Another excellent
proposal is Senator Braun's Promising Pathway Act (S. 1644, 2021).
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\28\ https://www.phrma.org/policy-issues/research-development.
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Improve Medicare Drug Coverage
There is bipartisan support for helping Medicare enrollee's deal with
prescription drug costs by capping their total Part D out-of-pocket
cost exposure and eliminating the infamous ``donut hole'' coverage gap.
AFP supports these sensible reforms to help make prescription drugs
more affordable.
Promote Generic Drug Competition
Robust generic competition is critical to ensuring that costly
medications and therapies become affordable, without harmful government
price controls or infringing the just rights of inventors. It's time to
end pay-for-delay schemes, patent evergreening, and abuse of FDA
citizen petitions. Good places to start include Senator Crapo's Lower
Costs More Cures Act (H.R. 19, 2021) \29\ and Senator Wyden's and
Senator Grassley's Prescription Drug Price Reduction Act (S. 2543,
2019, and S. 4199, 2020).\30\
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\29\ https://republicans-energycommerce.house.gov/wp-content/
uploads/2021/04/HR-19-Section-by-Section.pdf.
\30\ https://www.finance.senate.gov/imo/media/doc/
PDPRA%20Committee%20Report%20092
519%20FINAL.pdf.
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Legalize Drug Importation
Another way to put downward pressure on pharmaceutical costs is to
legalize drug importation from abroad. The current restrictions on such
importation unduly limit Americans' choices. While the pharmaceutical
industry objects that such a reform would merely ``import foreign price
controls'' into our country, it would actually put pressure on those
countries to relax their price controls, which would be good for
everyone. Importation should be allowed for individuals and importers,
and not just governments.
False Solution: Price Controls
America leads the world in access to breakthrough treatments, and
Americans get the latest medicines before the rest of the world. That
doesn't come cheap. This creates an unavoidable tradeoff between
profitability and life-saving innovation. Allowing the government to
set drug prices would only tilt that further away from innovation. In a
December 2019 report, the White House Council of Economic Advisers
estimated that H.R. 3 would reduce the pharmaceutical spending on
research and development by $75 billion to $200 billion over the next
decade. If price controls were to reduce R&D by $200 billion over the
next 10 years, the CEA concluded, the industry will introduce as many
as 100 fewer products over that period. Instead of 300 new drugs,
Americans would see 200. According to the CEA, Americans would be less
healthy and less economically productive. The $34.5 billion in annual
savings that the federal government would realize from price controls
would reduce annual economic output by $375 billion to $1 trillion,
imposing a cost to society 10 to 30 times the federal savings.\31\
Price controls have failed in other areas of the globe. In the European
Union, price controls have led to drug shortages.\32\ Meanwhile, while
Americans enjoy access to 89 percent of new drugs, Canadians only have
access to about half, because its government deems most new drugs ``too
expensive.'' Here's an example, In the United Kingdom, the National
Institute for Health and Care Excellence or NICE has recommended that
Tafamidis, an extremely costly drug (which in the U.S. costs about
$250,000 a year, or $25,000 a year in out-of-pocket costs to a patient)
not be covered at all: ``The cost-effectiveness estimates are higher
than what NICE normally considers an acceptable use of NHS
resources.''\33\ The Canadian Drug Expert Committee, which makes
reimbursement recommendations that provincial health plans use to
determine whether they will cover a drug, determined a price reduction
of more than 92 percent would be required for Tafamidis to be
considered ``cost-effective at a willingness-to-pay threshold of
$50,000 per [quality-adjusted life-year].'' A quality-adjusted life-
year, or QALY, is a bureaucratic way to quantify the value of a human
life in monetary terms and attempts to answer the question, ``Is paying
for this treatment a good use of taxpayer money?'' Implicitly, this
question disfavors patients who are sick, elderly, or disabled. A
pharmaceutical company facing the prospect of foreign QALY boards
setting prices for new drugs to treat rare diseases--in this case a 90
percent price cut or no coverage at all--is surely going to be loath to
invest in future such efforts. Rather, it will prefer to tweak and
repackage existing drugs that are already profitable. A Congressional
Budget Office working paper finds that 60 fewer new cures would be
approved if federal drug price controls like those proposed in the bill
H.R. 3 were enacted.\34\ A more recent analysis by economist Tomas
Philipson of the University of Chicago finds that such price controls
would lead up to a 60 percent reduction in drug company research and
development from 2021 to 2039, resulting in 167 to 342 fewer new FDA
approvals.\35\ The upper end of that range (342 drugs) is more than
half the total number of drugs approved by the FDA over the past 20
years (644 drugs).
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\31\ https://republicans-energycommerce.house.gov/news/in-the-news/
100-fewer-lifesaving-drugs/.
\32\ https://www.politico.eu/article/europe-still-coming-up-short-
on-drug-supplies/.
\33\ https://www.nice.org.uk/guidance/ta696/documents/final-
appraisal-determination-document.
\34\ https://www.cbo.gov/system/files/2021-08/57010-New-Drug-
Development.pdf.
\35\ https://cpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/d/3128/
files/2021/08/Issue-Brief-Price-Controls-and-Drug-Innovation-
Philipson.pdf.
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Encourage Pro-Consumer State-Level Reforms
Not all reforms can be achieved solely at the federal level. Some
require action by the States. The following state-level reforms are
included in this discussion, not only for completeness, but because, in
many cases, Congress can help support the States.
Liberate Direct Patient Care
Direct patient care, also known as direct primary care, is a great new
option that lets patients pay a flat fee for unlimited access to a
primary care doctor and preventive services, with no insurance-company
middle man. It's like a monthly Netflix subscription to your most
trusted doctors. AFP supports legislation to legalize DPC at the state
level, and encourages Congress to enact federal legislation to allow
people to use their tax-free HSA and HRA funds to pay for DPC
subscriptions out-of-pocket.
Strengthen Access to Short Term Renewable Health Plans
Short term renewable health insurance plans can be dramatically more
affordable than traditional plans, up to 50 to 80 percent more
affordable, because they are offer a streamlined, temporary option
unburdened by excessive government mandates that drive up costs. While
not a substitute for permanent coverage, these federally defined and
state-regulated plans are an important option that everyone should have
access to. About a dozen States have restricted them so severely, they
are either unavailable or unaffordable. Five States have essentially
outlawed them. Yet a recent study shows the only States where
individual market premiums have increased since 2018 are the five that
effectively prohibit these plans (California, Massachusetts, New
Jersey, New York, and Rhode Island). Meanwhile, that States that allow
short-term plans have lost fewer enrollees in the individual market,
have had far more insurers offer coverage in the market, and have had
larger premium reductions since 2018.\36\ Those hostile laws should be
repealed, and we encourage States to conform their policies to current
federal policy, which allows a plan duration of up to 12 months and
renewable for a total of 36 months. Congress, meanwhile, should codify
that existing policy while also allowing tax-free HSA and HRA funds to
be used for short term plans.
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\36\ https://galen.org/2021/individual-health-insurance-markets-
improving-in-states-that-fully-permit-short-term-plans-2/.
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Liberate Hospitals to Expand and Compete
You shouldn't need a government permission slip or a political
connection to provide a new medical service, purchase hospital
equipment, or build a new facility. Local CON laws require government
approval before private entities can do these things. Often, existing
market participants have a veto over new entrants. Such protectionism
harms patients and reduces the resilience we need to respond quickly to
a crisis like COVID-19. A veritable mountain of studies and papers show
that CON laws drive up costs and reduce quality, and that repealing
them saves lives.\37\ While Congress wisely repealed the federal CON
law back in the 1980s, and thus has no cause for federal legislation in
this area, it can and should provide oversight on the issue, as well as
moral support for state-level efforts to end this harmful
protectionism.
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\37\ https://www.mercatus.org/publications/corporate-welfare/
certificate-need-laws.
---------------------------------------------------------------------------
Let Nurses Deliver the Care They're Trained For
The nearly 80 million Americans who do not have sufficient access to a
health-care provider would be served better if medical professionals
like nurse practitioners were allowed to practice to the full extent of
their education and training without having to pay a physician for the
privilege. Senator Paul's Coronavirus Regulatory Repeal Act (S. 969,
2021) would make this and similar pandemic reforms permanent, while
giving Congress and federal regulators a chance to carefully review and
block changes that would not be in patients' best interest.
Let Doctors and Nurses Practice Across State Lines
The pandemic showed the vital importance of allowing doctors and nurses
to care for out-of-state patients, including via telehealth. State and
federal policies that effectively limit health-care professionals to
practicing within the borders of a single state reduce consumer choice,
interstate competition, and the quality of care. States should amend
their laws to automatically recognize out-of-state health professional
licenses. And while federal programs including Medicare should respect
state jurisdiction and policy choices, such programs should be reformed
where possible to facilitate interstate care delivery. For example,
Congress should make permanent Medicare policies adopted during the
pandemic that allow state-licensed doctors and nurses to treat patients
in and from other States.
False Solution: Single-Payer
Some people believe the only way to get affordable care is for the
government to provide it, or what they call a ``public option'' or
``Medicare for All.'' But that approach has been tried many times, and
the results are not encouraging. During the pandemic, we saw government
failures that made it harder to get people the help they needed--things
like providing testing kits that did not work, mask and ventilator
shortages for frontline workers, and rigid state laws that kept
hospitals from adding capacity and prevented doctors and nurses from
going where they were needed. The bright spots of the pandemic--
vaccines developed in record time, hospitals expanded overnight, nurses
and doctors practicing across state lines, a telehealth revolution--
came about because policymakers wisely removed unhelpful government
barriers. Peoples in countries with a single-payer system typically
experience shortages and bureaucratic rationing. Access to a waiting
list is not access to care. In Canada, where private health insurance
is effectively outlawed, health care is ``free,'' yet patients pay for
it in other ways.\38\ For example, Canadians receive fewer cancer
screenings than Americans do \39\ and have higher mortality rates for
certain cancers.\40\ The median wait time in Canada for an MRI scan is
more than two months--to be treated by a specialist, more than five
months.\41\ And while Americans enjoy access to 89 percent of new
drugs,\42\ Canadians have access to only 44 percent--Greeks and
Spaniards, a mere 14 percent--because their governments deem most new
drugs ``too expensive.''\43\ In these systems, people end up paying for
their ``free'' care by being forced to endure needless suffering, lost
income, and preventable death. Realistically, a national single-payer
program like that proposed by Senator Sanders (``Medicare for All'')
would mean significantly higher taxes for American families and
significantly less access to needed therapies. In fact, the
Congressional Budget Office estimates it would increase federal
spending by more than $32 trillion over the first ten years.\44\ Unlike
the false promise of ``Medicare for All,'' consumer-driven reforms like
these would make health care in our state even better and more
affordable for all.
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\38\ https://www.encounterbooks.com/features/sally-c-pipes-on-the-
false-promise-of-single-payer-healthcare/.
\39\ https://www.thecentersquare.com/opinion/op-ed-health-care-a-
personal-option-vs-the-public-option/article_c11a65e6-0a4f-11eb-b268-
5f4c8d38b20f.html.
\40\ https://www.cdc.gov/cancer/dcpc/research/index.htm.
\41\ https://www.fraserinstitute.org/studies/waiting-your-turn-
wait-times-for-health-care-in-canada-2019.
\42\ https://www.nationalreview.com/2020/08/canadian-single-payer-
health-care-system-slow-inefficient/.
\43\ https://galen.org/2019/examination-of-international-drug-
pricing-policies-in-selected-countries-shows-prevalent-government-
control-over-pricing-and-restrictions-on-access/.
\44\ https://economics21.org/medicare-for-all-winners-and-losers.
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Conclusion
Our system needs reforms. But overall it is a good system. Americans
enjoy superior quality and access, and something like universal
coverage, and most are satisfied with their current coverage and not
looking for a radical overhaul. Instead of further expanding government
health insurance programs, Congress should enact a personal option for
health care that enables us to fix what's broken in our system while
preserving what works. A personal option will give the American people
the choice and control they want, with the quality they deserve, at
prices they can afford, from the medical professionals they trust. We
stand ready to help you achieve this exciting vision.
______
Center for Fiscal Equity
14448 Parkvale Road, #6
Rockville, Maryland 20853
[email protected]
Statement of Michael G. Bindner
Chairman Grassley and Ranking Member Wyden, thank you for the
opportunity to submit our comments. With a new Administration in the
White House, the context for reform has changed. Whether what the
witnesses will tell you has changed will be determined at the hearing.
I am quite sure that none will provide exactly the same options as
below.
What we all agree on is that the system is fragmented. Unless Congress
abolishes the Veterans Health Administration (Tricare), the Federal
Employees Health Benefit Plan and the Postal Service plan, it will stay
that way. Even Medicare for All will not stand alone, given the
political realities. Unless coverage is extended to undocumented
workers, there will be leakages in the system. I will focus on future
options and leave further description of the gory details to the
invited witnesses.
Adding coverage of undocumented workers fills the major gap in coverage
which produces cost shifting. Higher co-pays under the Affordable Care
Act Silver Plan also cause bills to be unpaid. Families who cannot
afford higher options (largely because subsidies are inadequate) cannot
afford medical bills at all. The ending of mandates widened the gaps in
the system.
State contributions to Medicaid, plus the supposed drain of pension
costs for their employees, are a continuing source of concern.
The former can be remedied by splitting Medicaid into two pots, one for
the elderly and disabled and one for the unemployed and the working
poor. The first pot can then be transferred to CMMS as Medicare Part E.
As detailed in the first attachment, Medicare for All essentially turns
all of Medicare into what is now Medicaid. Part E would be a good step
in that direction.
As an aside, the push to advance fund pension costs for State
governments and USPS is not driven by necessity. It is driven by the
financial sector's desire to sell retirement funds to employees, thus
earning higher commissions than the current system. The fact that one
part of the financial sector insists on full funding while another
sells the likely result of this myth has given us the current
retirement income crisis most people face.
The majority of workers have incomes too low to save much, regardless
of how easy (or automatic) enrollment is made. Until the minimum wage
is increased, the refundable child tax credit is passed (and doubled
again--and even again), there is no room for consideration of subsidies
for increased saving.
The second way to relieve state budgets can be accomplished in one of
two ways. Option A is to enroll the unemployed and those in ESL,
remedial and higher educational, rehabilitative and job programs into
the health plan of the service provider and then raise the
reimbursement amounts for any programs delivered through the private
sector to include these costs. ESL training would be available
regardless of immigration status.
Option B is the Public Option rejected when the Affordable Care Act was
debated. Those who opposed it left Congress anyway--which should be a
lesson to ``moderate'' Senators. The President has proposed trying to
pass it again. Along with Medicare Part E, this is the best option for
now for an increased federal role.
As described in the first attachment, for passage to occur we would
have to give something to get something. In this case, higher broad
based taxes and ending pre-existing condition reforms would be that
price. Those who are denied coverage would be automatically enrolled in
the Public Option, which would be more heavily subsidized than
currently proposed. The Public Option would also include anyone left in
Medicaid not transferred to Medicare Part E. Under this plan, all
subsidies would be federal and would be much more generous.
The desire for greater profit, which is inherent in our economic system
(people get upset when I simply call it Capitalism), will lead
employers and insurance companies alike to exclude an ever growing
share of the workforce until the Public Option has become what is
essentially Medicare for All.
Pay it now, or pay it later. Either way, there will be a transition as
the finances are worked out.
This need not take long if health-care reform is combined with tax
reform. Payroll tax funding is a non-starter. Transferring costs to
higher income taxpayers ala the Affordable Care Act is not viable
either. The combination of the two is essentially some form of value
added tax.
Our tax reform plan provides a menu of such taxes, including a straight
up goods and services tax, an asset value-added tax (which is a
transaction-based form of the ACA tax structure, dividend, interest and
capital gains taxes) and a subtraction VAT. These are described more
fully in the second attachment.
The residual income surtax proposed would be dedicated to paying down
the National Debt. This should be a major selling point for those who
pay higher income taxes (but not high enough) and who also own the vast
majority of the debt held in mutual funds and directly held bonds. The
music must stop eventually, probably sooner than later. Starting now is
best.
A goods and services tax means everyone pays, including wealthier
retirees attempting to dodge taxation through tax free savings
accounts, life insurance policies--which can be borrowed from or used
to transfer intergenerational wealth, trusts and, for those who are new
to wealth, borrowing from their financial assets.
A GST, or Invoice VAT, is broad based and border adjustable. It is good
for workers and would be part of any comprehensive tax reform that
includes taking most households--indeed, almost all households--off the
income tax rolls.
An asset VAT will raise money, but the pool of money raised will
decrease given the proposed zero rating for ESOP sales, as well as the
loss in trading volume such a tax would bring on. Higher income
surtaxes would also decrease the money available for speculation by
higher income receivers (I will not call them earners--their high
compensation often results in cutting everyone else's pay).
Subtraction VAT funding would be used to the extent that private
insurance survives. As is currently the case, there would be a tax
exclusion--or even a credit--for providing health insurance to
employees. As described below, employee-owned firms could provide
direct services rather than third party care. As this sector expands,
the need for mandated insurance would simply end (as would outside
financing for employee borrowing).
The last option, although similar to the current funding system for
``first world'' employees, would also be the eventual long term
solution to funding gaps.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.
Attachment One--Hearing on Pathways to Universal Health Coverage, June
12, 2019
There are three methods to get to single-payer: a public option,
Medicare for All and single-payer with an option for cooperative
employers.
The first to set up a public option and end protections for pre-
existing conditions and mandates. The public option would then cover
all families who are rejected for either pre-existing conditions or the
inability to pay. In essence, this is an expansion of Medicaid to
everyone with a pre-existing condition. As such, it would be funded
through increased taxation, which will be addressed below. A variation
is the expansion of the Uniformed Public Health Service to treat such
individuals and their families.
The public option is inherently unstable over the long term. The profit
motive will ultimately make the exclusion pool grow until private
insurance would no longer be justified, leading-again to Single Payer
if the race to cut customers leads to no one left in private insurance
who is actually sick. This eventually becomes Medicare for All, but
with easier passage and sudden adoption as private health plans are
either banned or become bankrupt. Single-payer would then be what
occurs when
The second option is Medicare for All, which I described in an
attachment to June 18th and 19th's comments and previously in hearings
held May 8, 2019 (Finance) and May 8, 2018 (Ways and Means). Medicare
for All is essentially Medicaid for All without the smell of welfare
and with providers reimbursed at Medicare levels, with the difference
funded by tax revenue.
Medicare for All is a really good slogan, at least to mobilize the
base. One would think it would attract the support of even the Tea
Partiers who held up signs saying, ``don't let the government touch my
Medicare!'' Alas, it has not. This has been a conversation on the left
and it has not gotten beyond shouting slogans either. We need to decide
what we want and whether it really is Medicare for All. If we want to
go to any doctor we wish, pay nothing and have no premiums, then that
is not Medicare.
There are essentially two Medicares, a high option and a low one. One
option has Part A at no cost (funded by the Hospital Insurance Payroll
Tax and part of Obamacare's high unearned income tax as well as the
general fund), Medicare Part B, with a 20% copay and a $135 per month
premium and Medicare Part D, which has both premiums and copays and is
run through private providers. Parts A and B also are contracted out to
insurance companies for case management. Much of this is now managed
care, as is Medicare Advantage (Part C).
Medicaid lingers in the background and the foreground. It covers the
disabled in their first two years (and probably while they are seeking
disability and unable to work). It covers non-workers and the working
poor (who are too poor for Obamacare) and it covers seniors and the
disabled who are confined to a long-term care facility and who have run
out their assets. It also has the long-term portion which should be
federalized, but for the poor, it takes the form of an HMO, but with no
premiums and zero copays.
Obamacare has premiums with income-based supports (one of those facts
the Republicans hate) and copays. It may have a high option, like the
Federal Employee Health Benefits Program (which also covers Congress)
on which it is modeled, a standard option that puts you into an HMO.
The HMO drug copays for Obamacare are higher than for Medicare Part C,
but the office visit prices are exactly the same.
What does it mean, then, to want Medicare for All? If it means we want
everyone who can afford it to get Medicare Advantage Coverage, we
already have that. It is Obamacare. The reality is that Senator Sanders
wants to reduce Medicare copays and premiums to Medicaid levels and
then slowly reduce eligibility levels until everyone is covered. Of
course, this will still likely give us HMO coverage for everyone except
the very rich, unless he adds a high-option PPO or reimbursable plan.
Either Medicare for All or a real single payer would require a very
large payroll tax (and would eliminate the HI tax) or an employer paid
subtraction value-added tax (so it would not appear on receipts nor
would it be zero rated at the border, since there would be no evading
it), which we discuss below, because the Health Care Reform debate is
ultimately a tax reform debate. Too much money is at stake for it to be
otherwise, although we may do just as well to call Obamacare Medicare
for All and leave it alone.
The third option is an exclusion for employers, especially employee-
owned and cooperative firms, who provide medical care directly to their
employees without third party insurance, with the employer making HMO-
like arrangements with local hospitals and medical practices for
inpatient and specialist care.
Employer-based taxes, such as a subtraction VAT or payroll tax, will
provide an incentive to avoid these taxes by providing such care.
Employers who fund catastrophic care or operate nursing care facilities
would get an even higher benefit, with the proviso that any care so
provided be superior to the care available through Medicaid or Medicare
for All. Making employers responsible for most costs and for all cost
savings allows them to use some market power to get lower rates.
This proposal is probably the most promising way to arrest health-care
costs from their current upward spiral--as employers who would be
financially responsible for this care through taxes would have a real
incentive to limit spending in a way that individual taxpayers simply
do not have the means or incentive to exercise. The employee-ownership
must ultimately expand to most of the economy as an alternative to
capitalism, which is also unstable as income concentration becomes
obvious to all.
The key to any single-payer option is securing a funding stream. While
payroll taxes are the standard suggestion, there are problems with
progressivity if such taxes are capped and because profit remains
untaxed, which requires the difference be subsidized through higher
income taxes. For this reason, funding should come through some form of
value-added tax. Our revised tax reform plan can be found in Attachment
Two.
Attachment Two--Tax Reform, Center for Fiscal Equity, March 5, 2021
Individual payroll taxes. These are optional taxes for Old-Age and
Survivors Insurance after age 60 for widows or 62 for retirees. We say
optional because the collection of these taxes occurs if an income
sensitive retirement income is deemed necessary for program acceptance.
Higher incomes for most seniors would result if an employer
contribution funded by the Subtraction VAT described below were
credited on an equal dollar basis to all workers. If employee taxes are
retained, the ceiling should be lowered to $85,000 to reduce benefits
paid to wealthier individuals and a $16,000 floor should be established
so that Earned Income Tax Credits are no longer needed. Subsidies for
single workers should be abandoned in favor of radically higher minimum
wages.
Wage Surtaxes. Individual income taxes on salaries, which exclude
business taxes, above an individual standard deduction of $85,000 per
year, will range from 6.5% to 26%. This tax will fund net interest on
the debt (which will no longer be rolled over into new borrowing),
redemption of the Social Security Trust Fund, strategic, sea and non-
continental U.S. military deployments, veterans' health benefits as the
result of battlefield injuries, including mental health and addiction
and eventual debt reduction. Transferring OASDI employer funding from
existing payroll taxes would increase the rate but would allow it to
decline over time. So would peace.
Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
dividend taxes, and the estate tax. It will apply to asset sales,
dividend distributions, exercised options, rental income, inherited and
gifted assets and the profits from short sales. Tax payments for option
exercises and inherited assets will be reset, with prior tax payments
for that asset eliminated so that the seller gets no benefit from them.
In this perspective, it is the owner's increase in value that is taxed.
As with any sale of liquid or real assets, sales to a qualified broad-
based Employee Stock Ownership Plan will be tax-free. These taxes will
fund the same spending items as income or S-VAT surtaxes.
This tax will end Tax Gap issues owed by high-income individuals. A 26%
rate is between the GOP 24% rate (including ACA-SM and Pease surtaxes)
and the Democratic 28% rate. It's time to quit playing football with
tax rates to attract side bets. A single rate also stops gaming forms
of ownership. Lower rates are not as regressive as they seem. Only the
wealthy have capital gains in any significant amount. The de facto rate
for everyone else is zero.
Subtraction Value-Added Tax (S-VAT). These are employer paid Net
Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including
Health insurance or direct care, including veterans' health care
for non-
battlefield injuries and long-term care.
Employer-paid educational costs in lieu of taxes are provided as
either
employee-directed contributions to the public or private unionized
school of their choice or direct tuition payments for employee children
or for workers (including ESL and remedial skills). Wages will be paid
to students to meet opportunity costs.
Most importantly, a refundable child tax credit at median income
levels (with inflation adjustments) distributed with pay.
Subsistence-level benefits force the poor into servile labor. Wages and
benefits must be high enough to provide justice and human dignity. This
allows the ending of state administered subsidy programs and
discourages abortions, and as such enactment must be scored as a must
pass in voting rankings by pro-life organizations (and feminist
organizations as well). To assure child subsidies are distributed, S-
VAT will not be border adjustable.
The S-VAT is also used for personal accounts in Social Security,
provided that these accounts are insured through an insurance fund for
all such accounts, that accounts go toward employee ownership rather
than for a subsidy for the investment industry. Both employers and
employees must consent to a shift to these accounts, which will occur
if corporate democracy in existing ESOPs is given a thorough test. So
far it has not. S-VAT funded retirement accounts will be equal-dollar
credited for every worker. They also have the advantage of drawing on
both payroll and profit, making it less regressive.
A multi-tier S-VAT could replace income surtaxes in the same range.
Some will use corporations to avoid these taxes, but that corporation
would then pay all invoice and subtraction VAT payments (which would
distribute tax benefits. Distributions from such corporations will be
considered salary, not dividends.
Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on
purchase invoices. The rate varies according to what is being financed.
If Medicare for All does not contain offsets for employers who fund
their own medical personnel or for personal retirement accounts, both
of which would otherwise be funded by an S-VAT, then they would be
funded by the I-VAT to take advantage of border adjustability. I-VAT
also forces everyone, from the working poor to the beneficiaries of
inherited wealth, to pay taxes and share in the cost of government.
Enactment of both the A-VAT and I-VAT ends the need for capital gains
and inheritance taxes (apart from any initial payout). This tax would
take care of the low-income Tax Gap.
I-VAT will fund domestic discretionary spending, equal dollar employer
OASI contributions, and non-nuclear, non-deployed military spending,
possibly on a regional basis. Regional I-VAT would both require a
constitutional amendment to change the requirement that all excises be
national and to discourage unnecessary spending, especially when
allocated for electoral reasons rather than program needs. The latter
could also be funded by the asset VAT (decreasing the rate by from
19.5% to 13%).
As part of enactment, gross wages will be reduced to take into account
the shift to S-VAT and I-VAT, however net income will be increased by
the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
replace pass-through and proprietary business and corporate income
taxes.
Carbon Added Tax (CAT). A Carbon tax with receipt visibility, which
allows comparison shopping based on carbon content, even if it means a
more expensive item with lower carbon is purchased. C-VAT would also
replace fuel taxes. It will fund transportation costs, including mass
transit, and research into alternative fuels (including fusion). This
tax would not be border adjustable unless it is in other nations,
however in this case the imposition of this tax at the border will be
noted, with the U.S. tax applied to the overseas base..
Tax Reform Summary
This plan can be summarized as a list of specific actions:
1. Increase the standard deduction to workers making salaried income of
$425,001 and over, shifting business filing to a separate tax on
employers and eliminating all credits and deductions--starting at 6.5%,
going up to 26%, in $85,000 brackets.
2. Shift special rate taxes on capital income and gains from the income
tax to an asset VAT. Expand the exclusion for sales to an ESOP to
cooperatives and include sales of common and preferred stock. Mark
option exercise and the first sale after inheritance, gift or donation
to market.
3. End personal filing for incomes under $425,000.
4. Employers distribute the child tax credit with wages as an offset to
their quarterly tax filing (ending annual filings).
5. Employers collect and pay lower tier income taxes, starting at
$85,000 at 6.5%, with an increase to 13% for all salary payments over
$170,000 going up 6.5% for every $85,000 up to $340,000.
6. Shift payment of HI, DI, SM (ACA) payroll taxes to consumers or
employers, remove caps on employer payroll taxes and credit them to
workers on an equal dollar basis.
7. Employer paid taxes could as easily be called a subtraction VAT,
abolishing corporate income taxes. These should not be zero rated at
the border.
8. Expand current state/federal intergovernmental subtraction VAT to a
full GST with limited exclusions (food would be taxed) and add a
federal portion, which would also be collected by the States. Make
these taxes zero rated at the border. Rate should be 19.5% and replace
employer OASI contributions. Credit workers on an equal dollar basis.
9. Change employee OASI from 5% to 6.5% from $18,000 to $85,000 income.
This change is necessitated by decreased gross pay.
Video Link Statement to the committee sent separately: https://
www.youtube.com/watch?v=IQmc0Mey9_Q.
______
Consumers for Affordable Health Care
P.O. Box 2490
Augusta, ME 04338
Telephone: 1-800-965-7476
Fax: 1-888-214-5233
Website: https://www.mainecahc.org/
Email: [email protected]
October 19, 2021
Senator Ron Wyden
Chairman
Senator Mike Crapo
Ranking Member
U.S. Senate
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510-6200
Dear Senator Wyden, Senator Crapo, and distinguished members of the
Senate Committee on Finance,
Consumers for Affordable Health Care (CAHC) is designated by Maine's
Attorney General and the Bureau of Insurance as Maine's Health
Insurance Consumer Assistance Program. We operate a statewide toll-free
confidential HelpLine staffed by trained experts who provide assistance
to Mainers in understanding their health coverage options and enrolling
in and applying for private Marketplace and public health insurance
coverage.
Consumer Assistance Program staff provide training to and work closely
with other organizations involved in getting the word out about
coverage options, including Maine hospitals, community health centers,
community action programs and social service organizations. We also
work closely with organizations serving communities that experience
racial and ethnic disparities in accessing the health coverage and care
they need, including for example, Maine Access Immigrant Network,
Wabanaki Public Health, and New Mainers Public Health Initiative. The
outreach, education and enrollment work we are engaged in is, in part,
where we often hear about Mainers who are benefiting from health
coverage programs, in particular, the Affordable Care Act (ACA) and the
increase in subsidies created by the American Rescue Plan Act (ARPA),
as well as Medicaid expansion.
As the committee and other congressional policymakers discuss the
nation's budget reconciliation, we thought it would be helpful for you
to hear about Mainers who are benefiting from the initiatives described
above. People who have more affordable options because of the ACA and
ARPA. Monthly premium rates have decreased for tens of thousands of
Mainers and we have talked with many people over the past several
months who have looked into and enrolled in Marketplace coverage as a
result.\1\ Here are examples of Maine people who have found affordable
plans and are now able to access the health care and prescription
medicine they need:
---------------------------------------------------------------------------
\1\ CMS, 2021 Final Marketplace Special Enrollment Period Report,
https://www.hhs.gov/sites/default/files/2021-sep-final-enrollment-
report.pdf.
Pete R. who lives in Penobscot County. Pete has diabetes and is
not offered coverage through his work at an auto repair shop. His gross
income is about $31,000 annually. He was uninsured until recently when
he learned about increased monthly subsidies and enrolled in an
affordable Marketplace plan. He is now able to get the health care and
---------------------------------------------------------------------------
medications he needs to treat his diabetes at a cost he can afford.
Debra B. who lives Franklin County. Debra became uninsured when
she lost her job after the explosion at the Jay Paper Mill in 2020. She
could not afford her $350/month premium, but now, because of the ARPA
increase in subsidies and the extended Marketplace open enrollment, she
has coverage and is able to access the health care she needs until she
can find another job with health insurance.
Alfred H. is a lobsterman who lives in Washington County. He was
uninsured until recently and sometimes skipped the treatment or
medication he needs to manage his chronic conditions because of the
cost. His wife has coverage through work, but her employer does not
offer family coverage. Now that the American Rescue Plan Act increased
monthly subsidies, Alfred has coverage he can afford and is able to
better manage his diabetes and heart condition.
Julie G. lives in western Cumberland County. She previously
worked at a community health center, helping people enroll in
Marketplace coverage, until she found she needed help herself after
becoming disabled. Thanks to American Rescue Plan Act and the increase
in subsidies, she and her husband can enroll in a plan they can afford.
Mohamud H. lives in Cumberland County. He works every day to
help address the needs of refugee and asylee new Mainers. Once a new
Mainer himself, Mohamud now has affordable health coverage through the
Marketplace. The coverage enables him to remain healthy as he works to
ensure equal access to programs and services other New Mainers from
Africa and the Middle East need as they live, raise families and work
in Maine.
Tom A. lives in Oxford County. Tom was laid off from his job at
a small business due to COVID. He was receiving Unemployment Insurance
when he signed up for a Marketplace plan this past March. After
struggling to pay his monthly premium of over $318 a month, he was able
to access the increased subsidies under ARPA to lower his premium down
to $2.36/month.
Maia S. lives in Kennebec County. Maia was on her mother's
coverage until her mom changed jobs and was no longer offered family
coverage. Maia was not offered coverage through her work as a mental
health rehabilitation technician and is now enrolled in MaineCare
(Medicaid in Maine), through expansion. The coverage is helping her
access the mental health and other health care she needs as she attends
classes at the University of Maine at Augusta.
These are just a few of the people in Maine who are able to access the
affordable comprehensive health coverage they need through the
Marketplace and the Affordable Care Act's expanded Medicaid.
If we have learned anything from the pandemic, it is how important it
is for people to have access to affordable health coverage and care.
The high cost of coverage undermines the ability to access health care
and control the pandemic to the best possible extent.
The ability of Mainers to purchase affordable coverage is also
important to health-care providers in Maine, including our community
health centers, mental health clinics and hospitals, especially in
rural areas where health-care providers struggle to retain staff and
keep their doors open.
We urge you to support a budget reconciliation that extends and makes
permanent health coverage affordability provisions that Mainers and
other Americans are relying on and that will improve access to the
health care and medicine they need.
Sincerely,
Ann L. Woloson
Executive Director
Cc: Senator Debbie Stabenow
Senator Chuck Grassley
Senator Maria Cantwell
Senator John Cornyn
Senator John Thune
Senator Robert Menendez
Senator Thomas R. Carper
Senator Richard Burr
Senator Patrick J. Toomey
Senator Benjamin L. Cardin
Senator Rob Portman
Senator Sherrod Brown
Senator Michael F. Bennet
Senator Bob Casey
Senator Tim Scott
Senator Bill Cassidy
Senator James Lankford
Senator Steve Daines
Senator Todd Young
Senator Ben Sasse
Senator John Barrasso
Senator Mark R. Warner
Senator Sheldon Whitehouse
Senator Maggie Hassan
Senator Catherine Cortez Masto
Senator Elizabeth Warren
Senator Angus King
Senator Susan Collins
______
First Focus Campaign for Children
1400 Eye Street, NW, Suite 650
Washington, DC 20005
p: 202-657-0670
f: 202-657-0671
https://campaignforchildren.org/
November 2, 2021
Chairman Wyden, Ranking Member Crapo, and Members of the Senate
Committee on Finance, thank you for the opportunity to submit this
statement for the record.
The First Focus Campaign for Children is a bipartisan children's
advocacy organization dedicated to making children and families a
priority in federal policy and budget decisions. Our organization is
committed to ensuring that all our nation's children have equal
opportunity to reach their full potential.
The Status of Children's Health:
The number of U.S. children without health insurance rose in 2020 for
the fourth year in a row as the coronavirus pandemic tore through the
country.
Nearly 4.3 million children--or 5.6% of all U.S. children--did not have
health insurance in 2020, according to new data from the U.S. Census
Bureau, a 7% rise over 2019.\1\
---------------------------------------------------------------------------
\1\ Katherine Keisler-Starkey and Lisa N. Bunch, U.S. Census Bureau
Current Population Reports, P60-274, Health Insurance Coverage in the
United States: 2020, U.S. Government Publishing Office, Washington, DC,
September 2021.
Children of color were hit hardest, the data suggests, with 9.5% of
Hispanic children lacking health insurance. Black children lack health
insurance at a rate of 6%, while less than 4% of white children and
---------------------------------------------------------------------------
less than 3% of Asian children lack health insurance.
Children in the South have the highest uninsurance rate, at 7.7%. The
rate of children without insurance is more than twice as high in States
that have not expanded Medicaid, at 8.5% of children.
The numbers come as pediatric hospitalizations for COVID-19 surge. As
of October 28th, over 6.3 million children have tested positive for
COVID-19 since the onset of the pandemic, according to the American
Academy of Pediatrics, with more than 100,000 cases added in the past
week.\2\
---------------------------------------------------------------------------
\2\ Children and COVID-19: State Data Report. American Academy of
Pediatrics and the Children's Hospital Association, October 28, 2021,
https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-
infections/children-and-covid-19-state-level-data-report/.
There are bills before Congress now that will improve the health and
outcomes of children, some detailed below, and additional bills could
be introduced to help create an equitable health system for children.
Children's Health Insurance Program (CHIP) Permanency
Enacting legislation to make the popular and successful Children's
Health Insurance Program (CHIP) permanent ensures that the children and
pregnant people who receive health insurance through CHIP will never
again worry about their coverage expiring mid-year or mid-treatment. As
you know, CHIP funding expired on September 30, 2017, and CHIP was not
fully funded again until January 2018. For months States made
contingency plans for CHIP's possible demise, advocates and lawmakers
worked to extend funding, and families across the country received
disenrollment notices as they faced an uncertain future about their
children's health care. Never again should a family feel the fear and
worry of whether their child will have health coverage. Enactment of
legislation to make CHIP permanent would ensure that the health
coverage of children is no longer subjected to arbitrary deadlines and
funding cliffs that lead to chaos, distress, and anxiety for families
across this country.
For almost 25 years, CHIP has been an essential source of children's
coverage, ensuring access to high-quality, affordable, pediatric-
appropriate health care for children in working families whose parents
earn too much to qualify for Medicaid but too little to purchase
private health insurance on their own. CHIP has played a critical role
in reducing the number of uninsured children by more than 68 percent,
from an uninsurance rate of nearly 15 percent in 1997 to less than five
percent in 2016, while improving health outcomes and access to care for
children and pregnant women. CHIP, together with Medicaid, plays a
particularly important role for children of color: in 2019 more than
half of American Indian/Alaska Native, Black, multi-racial, and
Hispanic children relied on Medicaid and CHIP as their source of health
coverage. Since 2017, uninsurance rates for children have risen a full
percentage point to 5.7 percent. Around 726,000 children lost coverage
between 2016 and 2019--even before our country began facing a
devastating pandemic that has left more than 28 million Americans
infected with COVID-19, including more than six million children. As we
work to reverse course and get all eligible children covered, making
CHIP permanent is critical so families, medical providers, and
governors can depend on it to always be there. By making CHIP
permanent, the recurrent funding dilemma would be eliminated, allowing
States to develop their programs in ways that best serve children and
families. Finally, the public health emergency that has devastated our
nation for nearly two years should make clear that comprehensive,
affordable health coverage that is reliable is essential. Ensuring
CHIP's future as the critical part of the health insurance system for
children that it is must be a priority. To never again wonder about
CHIP's future would allow lawmakers, federal and state health
departments, advocates, pediatricians, and other providers to be
entirely focused and attentive to the emergencies at hand--ending the
COVID-19 pandemic, addressing our nation's shameful maternal and infant
mortality crises, and eliminating health disparities and promoting
health equity. Swift passage of legislation to make CHIP permanent will
ensure that never again will we divert any attention away from
improving child and maternal health outcomes to prepare for contingency
planning for the possible temporary expiration or end of CHIP.
Health Coverage for Children in Immigrant Families
All children should have access to health care, regardless of their
immigration status. The COVID-19 pandemic has made clear that we are
all connected, that children have been impacted by the public health
and economic crises, and that every child and family needs support to
recover. Congress must eliminate structural barriers in our immigration
system and other systems to protect all children's healthy development,
including the five-year waiting period for those with legal permanent
status to access certain federal programs and determinations of public
charge for children.
The Health Equity and Access under the Law for Immigrant Families Act
of 2021 or the HEAL for Immigrant Families Act of 2021 (S. 1660) would
help improve access to health care for children in immigrant families.
Specifically, it would eliminate the requirement for a five-year
waiting period for immigrants to enroll in Medicaid and CHIP, restore
full-benefit enrollment in Medicaid and CHIP to all eligible, federally
authorized immigrants by eliminating the outdated list of ``qualified''
immigrants, and ensure that all individuals with federally authorized
presence, including Deferred Action for Childhood Arrivals (DACA), are
eligible for federally funded health-care programs. Additionally, the
Lifting Immigrant Families through Benefits Access Restoration (BAR)
Act of 2021 (H.R. 5227) would eliminate the five-year bar and other
restrictions on immigrants' access to federal means-tested benefit
programs--such as Medicaid, SNAP, Temporary Assistance for Needy
Families (TANF), and Supplemental Security Income (SSI). These pieces
of legislation should be passed and implemented to ensure equal access
to health care.
Pass 12-Month Continuous Eligibility for Children in Medicaid and CHIP
Children in low-income families need to be continuously covered under
Medicaid or CHIP for a full year. While families may experience some
income fluctuation, their income does not change substantially or for
the long-term. Keeping children covered leads to improved health status
and well-being, promotes health equity, and alleviates the impact of
seasonal work, overtime, and variable work hours on low income
families. For States, continuous coverage for twelve months reduces
administrative costs and labor while helping to promote more efficient
health-care spending. When children with chronic conditions have
consistent access to medications and their medical home, and when all
children can access care when needed without interruptions, health-care
costs go down.\3\
---------------------------------------------------------------------------
\3\ Brooks, Tricia and Allexa Gardner, ``Continuous Coverage in
Medicaid and CHIP,'' Georgetown University Health Policy Institute,
Center for Children and Families, July 2021, https://
ccf.georgetown.edu/wp-content/uploads/2021/07/Continuous-Coverage-
Medicaid-CHIP-final.
pdf.
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Continuous Eligibility from Birth to Age Six
States should be allowed to cover children from birth to age six with
continuous coverage on Medicaid or CHIP. As their brains grow and
develop and before they are enrolled in regular, full-time school, we
need to ensure continuous health coverage for all children. The
American Academy of Pediatrics recommends babies get checkups at birth,
three-to-five days after birth, and then at 1, 2, 4, 6, 9, 12, 15, 18
and 24 months.\4\ Babies may receive referrals for additional
assessment and treatment from specialists and other providers during or
between any of these appointments. It is essential parents and medical
providers know their child's primary care and any referrals are covered
during this significant time in a child's development.
---------------------------------------------------------------------------
\4\ ``Recommendations for Preventive Pediatric Health Care,''
American Academy of Pediatrics, last updated February 2017, https://
www.aap.org/en-us/documents/periodicity--schedule.pdf.
A critical aspect of well-child exams during the first five years
includes developmental, behavioral, and psychosocial screenings. If
these screenings are missed or interrupted due to lack of coverage,
that can delay needed assessments and necessary early interventions. If
a child with a delay or suspected delay is not identified in an early
well-child check-up they will have to wait until someone identifies
this in school.\5\ If a child is not identified until school age, they
could have significant delays and might have lost many opportunities
for early interventions. This could cause undue harm and suffering to
the child and family and increase costs later. Continuous coverage
during the first 5 years of life would help ensure children see medical
providers regularly and receive appropriate care and referrals on time.
As Congress weighs the provision to require States to maintain coverage
for children for twelve months at a time without churning on and off
CHIP or Medicaid, we suggest a broader view of coverage for the
youngest children with continuous coverage from birth to age 6.
---------------------------------------------------------------------------
\5\ ``Developmental Monitoring and Screening,'' Centers for Disease
Control and Prevention, last visited 23, February 2018, https://
www.cdc.gov/ncbddd/childdevelopment/screening.html.
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12-Month Coverage for Postpartum Mothers
More than 700 women die each year in this country due to pregnancy or
delivery, a rate higher than nearly all other developed countries, and
60% of these deaths are preventable.\6\ Our rates of maternal death are
rising--the rate in 2019 was significantly higher than in
2018.\7\, \8\ The United States has an infant mortality rate
that ranks 33rd out of the 37 Organization for Economic Cooperation and
Development member countries.\9\ And the statistics are significantly
worse for Black women and infants compared to their white peers. In
2019, the maternal mortality rate for Black women was 2.5 times higher
than that of white women and 3.5 times higher than that of Hispanic
women.\10\
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\6\ Building U.S. Capacity to Review and Prevent Maternal Deaths.
(2018). Report from nine maternal mortality review committees.
Available at: https://www.cdcfoundation.org/sites/default/files/files/
ReportfromNineMMRCs.pdf.
\7\ Centers for Disease Control and Prevention, Pregnancy-Related
Deaths. Available at: https://www.cdc.gov/reproductivehealth/
maternalinfanthealth/pregnancy-relatedmortality.htm.
\8\ Hoyert DL. Maternal mortality rates in the United States, 2019.
NCHS Health E-Stats. 2021. DOI: https://doi.org/10.15620/
cdc:103855externalicon.
\9\ United Health Foundation. (2020). America's Health Rankings,
Annual Report, https://assets.americashealthrankings.org/app/uploads/
annual20-rev-complete.pdf.
\10\ Hoyert DL. Maternal mortality rates in the United States,
2019. NCHS Health E-Stats. 2021. DOI: https://doi.org/10.15620/
cdc:103855externalicon.
Medicaid coverage is an important piece of reducing maternal mortality
rates, and it varies greatly between States. Coverage is higher and
uninsured rates are lower for pregnant and postpartum women in States
that have expanded Medicaid coverage.\11\ Approximately half of all
uninsured new mothers reported that losing Medicaid or other coverage
after pregnancy was the reason they were uninsured.\12\ And the decline
in infant mortality rates is 50% greater in Medicaid expansion States
than in non-expansion States and includes a significant reduction in
racial disparities.\13\ Numerous stakeholders have advocated for a 12-
month expansion of postpartum Medicaid coverage in recent years, and
COVID-19-related legislation passed in 2020 has begun to make progress
toward that goal. The Families First Coronavirus Recovery Act included
a requirement of continuous coverage for Medicaid enrollees through the
end of the public health emergency, including for pregnant women. The
American Rescue Plan included a time-limited, five-year state option
for postpartum coverage of up to 12 months, well over the 60 days now
required. And in the Centers for Medicare and Medicaid Services (CMS)
has approved several state waiver requests to extend postpartum
coverage to 12 months. We support efforts in Congress to make permanent
the extension of Medicaid benefits to 12 months of postpartum care.
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\11\ Ranji, Usha, Ivette Gomez, and Alina Salganicoff, ``Expanding
Postpartum Medicaid Coverage,'' KFF, March 9, 2021, https://
www.kff.org/womens-health-policy/issue-brief/expanding-postpartum-
medicaid-coverage/.
\12\ Urban Institute. Uninsured New Mothers' Health and Health Care
Challenges Highlight the Benefits of Increasing Postpartum Medicaid
Coverage. May 28, 2020. Available at: https://www.urban.org/research/
publication/uninsured-new-mothers-health-and-health-care-challenges
highlight-benefits-increasing-postpartum-medicaid-coverage.
\13\ Searing, Adam and Donna Cohen Ross, ``Medicaid Expansion Fills
Gaps in Maternal Health Coverage Leading to Healthier Mothers and
Babies,'' Georgetown University Center for Children and Families, May
2019, https://ccf.georgetown.edu/wp-content/uploads/2019/05/Maternal-
Health-3a.pdf.
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Improve ACA Affordability by Eliminating the ``Family Glitch''
The ACA offers tax credits to make private, employer-sponsored health
insurance more affordable for working families. The law bases
eligibility determinations on a comparison of the cost of the insurance
and the family's income. However, the Treasury Department's regulations
implementing that provision of the ACA base that assessment on the cost
of insuring the employee alone, instead of the cost of family coverage.
While individual-only employer-sponsored health insurance premiums
average around $7,470 a year, annual premiums for family coverage
average $21,342--nearly triple.\14\
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\14\ ``2020 Employer Health Benefits Survey,'' Kaiser Family
Foundation, October 8, 2020, https://www.kff.org/health-costs/report/
2020-employer-health-benefits-survey/.
Over 5 million people fall into the ACA family glitch, and the vast
majority (4.4 million people or 85%) are currently enrolled through
employer-sponsored health insurance.\15\ These families likely spend
far more for health insurance coverage than individuals with similar
incomes eligible for financial assistance on the ACA Marketplaces and
could spend less on premiums if they could enroll in Marketplace plans
and qualify for subsidies. One study estimated that those impacted by
the family glitch are spending on average 15.8% of their incomes on
employer-based coverage.\16\
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\15\ Cox, Cynthia, Krutika Amin, Gary Claxton, and Daniel
McDermott, ``The ACA Family Glitch and Affordability of Employer
Coverage,'' Kaiser Family Foundation, April 7, 2021, https://
www.kff.org/health-reform/issue-brief/the-aca-family-glitch-and-
affordability-of-employer-coverage/.
\16\ Buettgens, Matthew, Lisa Dubay, and Genevieve M. Kenney.
``Marketplace subsidies: Changing the `Family Glitch' reduces family
health spending but increases government costs.'' Health Affairs 35.7
(2016): 1167-1175.
If not clarified by the Administration or changed through legislation,
this interpretation will continue to leave millions of children as well
as their non-employee parents ineligible for tax credits or subsidized
coverage in the ACA Marketplaces. Over half of those who fall in the
ACA family glitch (about 2.8 million people) are children under the age
of 18. These are children who do not qualify for the Children's Health
Insurance Program (CHIP). About 500,00 people in the family glitch are
ages 18-26. The ACA requires employers to offer coverage to dependents
up to age 26, but that coverage does not need to meet affordability
standards set elsewhere in the ACA.\17\
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\17\ Ibid, 15.
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Permit Families to Buy In to Coverage through Medicaid or the Federal
Employees Health Benefits Program (FEHBP)
For families who are self-employed, work part-time, or work for small
businesses that may not offer health benefits, these options offer the
chance to provide their children with coverage that will meet their
needs and be cost-effective. Allowing all families regardless of income
and immigration status to buy into coverage through these programs will
improve coverage and access to care for families who remain in the
coverage gap.
Conclusion
More than ever before children across the country are waiting for
Congress to do its part and secure their coverage and help improve
their lives. There are bills before Congress now that will advance the
health and development of children, and additional bills could be
introduced. At the First Focus Campaign for Children, we stand ready to
work together to get legislation passed to insure all children with the
health coverage that will meet their needs to grow, develop, and
thrive.
Thank you for the consideration of our ideas. Please reach out to Bruce
Lesley at [email protected].
Sincerely,
Bruce Lesley
President
______
Healthcare Leadership Council
750 9th Street, NW, Suite #500
Washington, D.C. 20001
202-452-8700
October 20, 2021
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
Washington, DC 20510 Washington, DC 20510
Dear Chair Wyden and Ranking Member Crapo:
On behalf of the Healthcare Leadership Council (HLC), we thank you for
holding a hearing on, ``Health Insurance Coverage in America: Current
and Future Role of Federal Programs.'' HLC appreciates the opportunity
to share its thoughts with you on several healthcare coverage
priorities.
HLC is a coalition of chief executives from all disciplines within
American healthcare. It is the exclusive forum for the nation's
healthcare leaders to jointly develop policies, plans, and programs to
achieve their vision of a 21st-century healthcare system that makes
affordable high-quality care accessible to all Americans. Members of
HLC--hospitals, academic health centers, health plans, pharmaceutical
companies, medical device manufacturers, laboratories, biotech firms,
health product distributors, post-acute care providers, home care
providers, and information technology companies--advocate for measures
to increase the quality and efficiency of healthcare through a patient-
centered approach.
Medicare Part D Drug Coverage
Nearly nine of every 10 Medicare beneficiaries enrolled in Part D
prescription drug plans say they are satisfied with their medication
coverage with large majorities saying that their costs for both generic
and name-brand drugs are affordable.\1\ In the current Medicare Part D
program, beneficiaries are only responsible for 5 percent of drug costs
above the catastrophic threshold. However, five percent of a $100,000
drug is burdensome for seniors. Annual out-of-pocket expenses for these
patients are significant. Beneficiary spending exceeds more than $3,000
on average, and one in 10 beneficiaries spends at least $5,200 for out-
of-pocket prescription drug costs. HLC supports an out-of-pocket cap
that provides all seniors with certainty and financial relief. We
believe that any changes to the Medicare Part D program should be
patient-centered and address beneficiaries' affordability issues.
---------------------------------------------------------------------------
\1\ Nationwide Survey of Seniors Shows High Approval Ratings for
Medicare Prescription Drug Coverage; Beneficiaries Say Their Part D
Plans Are Affordable, Provide Good Value, Medicare Today (July 28,
2021), https://medicaretoday.org/2021/07/nationwide-survey-of-seniors-
shows-high-approval-ratings-for-medicare-prescription-drug-coverage-
beneficiaries-say-their-part-d-plans-are-affordable-provide-good-
value/.
HLC believes that establishing an out-of-pocket cap is a meaningful way
to help seniors afford the lifesaving prescription drugs they need,
especially those who are not eligible for supplemental help. The cost
associated with an out-of-pocket cap needs to be shared among
stakeholders, including, but not limited to health plans,
pharmaceutical manufacturers, and the federal government.
Single Payer Healthcare System
HLC believes all Americans should have access to affordable, high-
quality healthcare. Congress and the administration should bolster the
stability of the health insurance marketplace by encouraging greater
competition, and providing all Americans enhanced coverage choice by
guaranteeing issuance of health insurance for those with preexisting
medical conditions, with no annual, or lifetime coverage limits, but in
conjunction with continuous coverage requirements and other critical
safeguards to prevent adverse selection.
Specifically, HLC opposes Medicare-for-All approaches, including
permutations such as a public option and Medicare and Medicaid buy-in
proposals, which could adversely affect care delivery. While HLC
supports access to universal health coverage, we believe that should be
done by building on what's currently working. More than 90% of
Americans had health coverage at some time in 2020.\2\ Polling has
consistently shown Americans are not seeking a radical overhaul of our
healthcare system. Further, there is no compelling evidence they would
be better off if it did occur. The most striking aspect of a single
payer healthcare system is not what it gives to millions of working
families and individuals, but what it takes away. It forces everyone,
no matter how much they value their current health coverage, to give
that up and enter into a one-size-fits-all system that would require
significant tax increases to provide adequate financing.
---------------------------------------------------------------------------
\2\ U.S. Census Bureau: Health Insurance Coverage in the United
States: 2020 Highlights: In 2020, 8.6 percent of people, or 28.0
million, did not have health insurance at any point during the year and
the percentage of people with health insurance coverage for all or part
of 2020 was 91.4.(September 14, 2021), https://www.census.gov/library/
publications/2021/demo/p60-
274.html#::text=Highlights,part%20of%202020%20was%2091.4.
In addition, it is impossible to overstate the extent to which a
government-run public health insurance option or a Medicare buy-in
approach could destabilize the health insurance marketplace and
generate unexpected adverse consequences for consumers and healthcare
---------------------------------------------------------------------------
providers.
Assuming that a public option or Medicare buy-in are successful in
attracting a significant number of enrollees--entirely probable because
the government would have the power to establish below-market out-of-
pocket costs--private health plans would find it more difficult to
remain competitive in the individual coverage marketplace and some
would undoubtedly cease participation. In fact, a recent study by FTI
Consulting \3\ found that, over the next decade, up to two million
enrollees in the individual marketplace would lose their private health
insurance coverage in the event a public option is enacted.
---------------------------------------------------------------------------
\3\ Assessing the Impact of a Public Option on Market Stability and
Consumer Choice, FTI Consulting (November 19, 2019), https://
www.fticonsulting.com/-/media/files/us-files/insights/reports/2019/nov/
impact-public-option-market-stability-consumer-choice.pdf?rev=e91f388
b1bb543faab36366f95396e4b&hash=3BACC4822BE377790B491D34915B215F.
Should this occur, not only will we see Americans lose choice in their
healthcare decision making, but also healthcare providers and
participants in employer-based private insurance plans could be harmed
if a public option or Medicare buy-in utilizes Medicare reimbursement
rates. That would force a destructive level of cost shifting. Thus, HLC
---------------------------------------------------------------------------
strongly urges Congress to oppose these types of proposals.
Healthcare is currently in a period of evolution, transitioning from a
fee-for-service system to one that emphasizes value, improved outcomes,
elevated population health, and greater cost- efficiency. To halt this
progress in order to create a massive new single payer healthcare
system would serve the interests of neither taxpayers nor patients. HLC
believes that Congress should continue improving and building upon the
current healthcare system. These improvements could include:
Expand Private Coverage
Offer employers and consumers more choices for their coverage,
increasing competition in the market (e.g., value-based insurance
designs), and removing barriers to innovation.
Modernize health plans that are linked to health savings
accounts (HSAs).
Allow all catastrophic and bronze health plans to
qualify as HSA-eligible.
Allow flexibility for high-deductible health
plans (HDHPs) to reimburse certain services, treatments, or medications
necessary to treat chronic health conditions before an enrollee has met
their deductible, which will allow millions of Americans in HSA-
eligible plans to better afford essential services.
Expand Health Reimbursement Arrangements by allowing them to
fund the purchase of short-term renewable health insurance plans, which
can be much more affordable than traditional plans.
Health Insurance Exchanges Stabilization
Provide regulatory relief to allow States to redirect subsidies
according to the unique needs of healthcare beneficiaries in their
States.
Continue the current auto-reenrollment process. Auto-
reenrollment promotes continuous coverage for enrollees and limits gaps
in coverage that impede consumers' access to care. Ending or modifying
auto-reenrollment would have serious, negative consequences for
consumers, issuers, brokers, and exchanges.
Continue to defer to States on ``silver loading.'' Silver
loading refers to when health insurers load premium increases into the
popular silver-level exchange plans to make up for the loss of cost-
sharing reduction payments. Removing silver loading would increase the
number of uninsured and result in significant consumer premium
increases for both those eligible and ineligible for Advanced Premium
Tax Credits (APTCs). State regulators are in the best position to
identify which rating practices will best protect consumers in their
States.
Fix the ``family glitch'' in which the cost to add family
members to an individual's employer-sponsored health insurance is not
considered when determining ``affordability.''
Educate stakeholders on how to enroll potential beneficiaries
using mass communication technology without violating the Telephone
Consumer Protection Act.
Medicaid Expansion
HLC shares your goal of achieving greater healthcare affordability so
that every American had the opportunity to attain quality coverage. The
American Rescue Plan Act has helped strengthen healthcare quality and
access during the COVID-19 public health crisis. However, more is
needed to close the coverage gap in Medicaid non-expansion States.
Adults who fall into the coverage gap have incomes above their state's
eligibility for Medicaid but below poverty, the minimum income
eligibility for tax credits through the Affordable Care Act
marketplace. This makes coverage unaffordable for most of these
individuals.
Research shows that Medicaid expansion has wide-ranging benefits,
including reducing overall mortality, as well as cardiovascular disease
and liver disease. It has decreased racial disparities in coverage
rates, affordability of care, and in some States, health outcomes
including maternal mortality. Some 60 percent of people in the gap in
2019 were people of color, reflecting longstanding racial and ethnic
disparities in healthcare access that coverage expansions would do much
to address. Closing the coverage gap, by allowing individuals in non-
expansion States access to the health insurance exchanges or other
means, and providing more Americans with quality, affordable,
healthcare coverage is vitally important to reducing both the uninsured
rate and health inequities across the United States.
Thank you again for your efforts to improve healthcare coverage in
America. HLC looks forward to continuing to collaborate with you on
this important issue. If you have any questions, please do not hesitate
to contact Debbie Witchey at (202) 449-3435 or [email protected].
Sincerely,
Mary R. Grealy
President
______
HR Policy Association and American Health Policy Institute
1001 19th Street North, Suite 1002
Arlington, VA 22209
HR Policy Association represents the chief human resource officers
of more than 390 of the largest employers in the United States.
Collectively, their companies provide health-care coverage to over 21
million employees and dependents in the United States. The American
Health Policy Institute, which was created by the Association, serves
to examine the challenges employers face in providing health care to
their employees and recommends policy solutions to promote the
provision of affordable, high-quality, employer-based health care.
Employer-sponsored health coverage is a critical pillar of the
American health-care system with significant strengths public programs
cannot provide. For example, employers can act more quickly than public
programs to adopt new technologies and plan offerings that improve the
quality of care and help control costs. Employers can also tailor their
health benefits to the unique needs of their employee populations and
can therefore provide more efficient and effective care.
HR Policy Association members believe all Americans should have
access to affordable choices for high-quality health care and reforms
should focus on improving access while reducing unnecessary costs. When
considering health-care reforms to address coverage issues, Congress
should follow the following principles:
Preserve employer-sponsored health coverage: Reforms should
strengthen employer-sponsored health coverage so that companies are
encouraged to continue to provide coverage to their employees.
Employers are in a unique position to advocate for their employees to
receive value-based care and services and to encourage employees to
engage in their care and health.
Foster innovation: Employers and the health care supply chain
should have the flexibility to design and implement health care benefit
solutions, payment models, and information exchange to ensure best
health outcomes through evidence-based treatments and reduced waste.
Federal policies should leverage and encourage this innovation by
reducing unnecessary and costly mandates and restrictions.
Increase transparency: Reforms should enable employees to be
prudent consumers of health care by fostering patient and employer
access to appropriate health-care value, price and quality data while
protecting individual privacy and security. Common data definition and
standards are required to allow consistent evaluation of value across
the health-care ecosystem.
Drive quality improvement: All stakeholders--employers,
providers, insurers, intermediaries, individuals, and government should
work towards a common set of quality measures to improve the health of
consumers and ensure Americans receive appropriate, high-quality care.
Employers have a great stake in the development and implementation
of health-care policies. We urge Congress to devote its attention and
resources toward addressing systematic cost drivers and wasteful
spending. We stand ready to work with the 117th Congress in a
bipartisan manner to strengthen and preserve our nation's private-
sector employment-based health system.
______
National Association of Health Underwriters
1212 New York Avenue, NW, Suite 1100
Washington, DC 20005
202-552-5060
www.nahu.org
I am writing on behalf of the National Association of Health
Underwriters (NAHU), a professional association representing over
100,000 licensed health insurance agents, brokers, general agents,
consultants, and employee benefits specialists. The members of NAHU
work daily to help millions of individuals and employers of all sizes
purchase, administer, and utilize health plans of all types.
The health insurance agents and brokers that NAHU represents are a
vital piece of the health insurance market and play an instrumental
role in assisting employers and individual consumers with choosing the
health plan or plans that is best for them. Eighty-two percent of all
firms use a broker or consultant to assist in choosing a health plan
for their employees \1\ and eighty-four percent of people shopping for
individual exchange plans found brokers helpful--the highest rating for
any group assisting consumers.\2\ Additionally, premiums are 13 percent
lower in counties with the greatest concentration of brokers.\3\
Consequently, the NAHU membership has a vested interest in ensuring
that consumers enjoy affordable health coverage that is the correct fit
for their clients.
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\1\ Kaiser Family Foundation. Employee Health Benefits Annual
Survey. October 2013.
\2\ Blavin, Fredric, et al. Obtaining Information on Marketplace
Health Plans: Websites Dominate but Key Groups Also Use Other Sources.
Urban Institute. June 2014.
\3\ Karaca-Mandic, Pinar, et al. The Role of Agents and Brokers in
the Market for Health Insurance. National Bureau of Economic Research.
August 2013.
Approximately 156 million Americans, nearly half of the country's total
population, are enrolled in health insurance coverage from their
employer. Recent surveys indicate that most adults are satisfied with
their current health coverage, with those enrolled in employer plans
the most satisfied.\4\ For those who qualify for Medicare, 96 percent
of Medicare Advantage beneficiaries are satisfied with their quality of
care, as are 95 percent of those covered by traditional Medicare.\5\
This means that employer-sponsored insurance and Medicare are some of
the most popular forms of health coverage in the United States.
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\4\ Collins, Sara. What Do Americans Think About Their Health
Coverage Ahead of the 2020 Election? Findings from the Commonwealth
Fund Health Insurance in America Survey, March--June 2019. Commonwealth
Fund. Sept. 2019.
\5\ Jacobson, Gretchen, et al. Medicare Advantage vs. Traditional
Medicare: How Do Beneficiaries' Characteristics and Experiences Differ?
Commonwealth Fund. 14 October 2021.
Because many people have a positive opinion of Medicare, the world
``Medicare'' has frequently been used by those who advocate for a
greater role for the government in health-care delivery, such as a
single-payer system. Since beneficiary satisfaction rates for Medicare
and Medicare Advantage are generally high, using the word ``Medicare''
or using Medicare as a starting off place for changes often draws the
attention even of those who otherwise would say they aren't interested
in a single-payer health-care system. However, public polling indicates
that most Americans do not support such a shift in our system. While
most Americans believe the federal government can do more to help
provide health insurance and believe in the idea of universal health
coverage, once they learn more about how a single-payer system would
work, support for such an idea drops dramatically. For example, 60
percent of consumers oppose any major shift that would threaten the
current Medicare program.\6\ Because of this and the high level of
satisfaction in both the current Medicare program and in employer
sponsored coverage, care should be taken to ensure that any future
proposals aimed at increasing Americans' access to affordable health
coverage not jeopardize the employer-sponsored market or the Medicare
program as they are currently structured.
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\6\ Kaiser Family Foundation. Public Opinion on Single-Payer,
National Health Plans, and Expanding Access to Medicare Coverage. 16
October 2020.
Some proposals envision new government programs such as a public option
competing with private coverage in order to increase market
competition. Unfortunately, these proposals may do just the opposite.
In order for market competition to work in any market, the market rules
must be the same for all market participants. When the government
offers a product that competes with private coverage, it plays by a
different set of rules, because it can mandate the level of healthcare
provider payments. This creates an unlevel playing field in the
insurance market where it is offered, since private plans must
negotiate the best rates they can but are unable to force providers to
accept lower rates. Medicare sets reimbursement rates lower than
private payers and the costs are shifted to the private market; since
Medicare pays providers an average of 80 percent of the cost of care
delivered,\7\ and some rate differentials are even higher. Providers
routinely make up for this shortfall by charging private plans more.\8\
Since medical expenses are the biggest part of any premium dollar by
law, this means that the competing plan offered by the government will
be priced artificially lower than private coverage. Eventually these
government plans would push private coverage out of existence.
---------------------------------------------------------------------------
\7\ Centers for Medicare and Medicaid Services. How to Use the
Searchable Medicare Physician Fee Schedule (MPFS). March 2021.
\8\ Milliman. Why hospital cost shifting is no longer a viable
strategy. June 2010.
Some provisions to extend federal healthcare programing, including
lowering the eligibility age for Medicare would create a comparable
imbalance in the current individual market because of this unequal
pricing ability. It creates a similar problem in the employer market
because, under current proposals, employees in employer-sponsored plans
would be able to opt out of employer coverage in favor of buying into
Medicare. Additionally, in the employer market, this opt-out ability
would create adverse selection in the employer market as those opting
out of employer coverage in favor of Medicare would likely be most
attractive to employees who were younger and healthier since Medicare
benefits are less generous than those found in most employer sponsored
plans. This would leave those remaining in the employer coverage likely
to be older and sicker, potentially damaging the viability of the pool
---------------------------------------------------------------------------
of covered individuals in the employer plan.
On top of the unlevel playing field it would create, lowering
Medicare's eligibility age would not significantly increase the number
of people with insurance. Almost two-thirds of the more than 20 million
people between the ages of 60 and 64 already have private health
coverage, with 25 percent obtaining public coverage through Medicaid or
other government programs. And 11 percent purchase plans on the
individual market, including through the ACA's exchanges. Less than 10
percent of people in this age group are uninsured. In other words,
expanding Medicare would simply replace the soon-to-be seniors'
existing coverage, which is typically private, with publicly funded
coverage.
Additionally, Medicare scarcely has enough money to cover the costs of
its current beneficiaries. According to the latest report from its
trustees, Medicare's hospital insurance trust fund will be exhausted by
2026.\9\ At that point, the program will not be taking in enough in tax
revenue to pay claims. The federal government may have to unilaterally
cut rates to providers, which would undermine patients' ability to
access care. With insolvency looming for Medicare, expanding the
program is not prudent nor fiscally appropriate.
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\9\ Stewart, Jackie. Medicare Part A Funds to Run Out in 2026.
Kiplinger. 31 August 2021.
While lowering Medicare eligibility and creating a single-payer system
or public option would undoubtedly threaten the Medicare program and
private markets, there are other proposals that also threaten the
system as is. One of the most important structures in the health
insurance market is the barrier between employer-
sponsored health coverage and the individual market, commonly referred
to as ``the firewall.'' The firewall prevents employees who have an
offer of affordable minimum value job-based coverage from receiving
premium tax credits in the marketplace; this is one ACA provision that
has been most useful in limiting disruption to individuals already
enrolled in employer-sponsored coverage. Any proposal that seeks to
eliminate or significantly weaken this firewall threatens the viability
of the
employer-sponsored market and could result in crowding out. High levels
of crowd-out could encourage employers to drop coverage, causing many
of those who previously had access to employer plans to search for a
---------------------------------------------------------------------------
new plan or go uninsured.
ACA premium tax credits are helpful for consumers who receive
individual market coverage from the ACA Marketplace. Since the passage
of the American Rescue Plan Act, premium tax credits have been extended
to those with incomes above 400 percent of the federal poverty level,
reducing premium contributions significantly for those who purchase
coverage on the individual market. NAHU supports expanding and building
upon the ACA in this fashion, as opposed to any sweeping changes to the
Medicare program that could jeopardize the entire system. However,
these expanded subsidies are only effective when there is a clear line
between the individual market and employer-sponsored market. For these
reasons, any future proposals impacting health insurance must maintain
the ACA's firewall.
We appreciate the opportunity to provide these comments and would be
pleased to respond to any additional questions or concerns of the
committee. If you have any questions about our comments or if NAHU can
be of assistance as you move forward, please do not hesitate to contact
me at either (202) 595-0639 or [email protected].
Sincerely,
Janet Stokes Trautwein
CEO, National Association of Health Underwriters
______
National Retail Federation
1101 New York Avenue, NW, Suite 1200
Washington, DC 20005
www.nrf.com
October 25, 2021
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Senators Wyden and Crapo:
On behalf of the National Retail Federation (NRF), I write to thank
you for holding your recent hearing on ``Health Insurance Coverage in
America: Current and Future Role of Federal Programs.'' NRF strongly
supports employment-based coverage and urges this Committee to guard
against disrupting this vital base of coverage.
NRF is the world's largest retail trade association, representing
discount and department stores, home goods and specialty stores, Main
Street merchants, grocers, wholesalers, chain restaurants and internet
retailers from the United States and more than 45 countries. Retail is
the nation's largest private-sector employer, supporting one in four
U.S. jobs--52 million working Americans. Contributing $3.9 trillion to
annual GDP, retail is a daily barometer for the nation's economy.
More than 181 million Americans get their health coverage today
through employers. Employer-sponsored insurance provides employers and
other stakeholders with incentives and opportunities to innovate,
strengthen and protect the system from threats. This is the single
largest source of coverage in America today.
The nationally uniform framework established by the Employee
Retirement Income Security Act (ERISA) is the backbone of the employer-
based health-care system because it allows employers to maintain common
benefit plans, which provide employees comprehensive, affordable plan
options. Preserving employers' ability to offer and maintain uniform
and affordable benefit plans across the country is key to preserving
the employer-sponsored benefits system.
Policymakers should avoid policies that weaken the pillars that
support employer-sponsored insurance. Policy proposals that threaten
ERISA's uniformity or seek to change the tax treatment of coverage will
decrease innovation and increase costs for employees. These proposals
threaten the very basis of coverage for most working Americans.
Public programs like Medicare, Medicaid and the exchanges serve a
vital and irreplaceable role in our health-care system. Some proposals
to expand Medicare, Medicaid, or increase Affordable Care Act
subsidization could disrupt employer-
sponsored insurance by cannibalizing employees from employer-sponsored
group coverage. For example, an employee-optional early buy-in to
Medicare or subsidized enrollment in the individual market could saddle
the employer plan's risk pool with less healthy employees who prefer
the richer coverage available in the employer plan. The natural risk
balance in employer plans between younger, older, healthier or less
healthy employees helps to keep coverage more affordable for all
employees and covered dependents in the group.
The employer-based health-care system would also be harmed by the
enactment of civil monetary penalties for mental health parity
violations. Addressing the current mental health crisis will require
significant efforts in partnership between employers, providers,
government, patient groups and other stakeholders. The imposition of
new civil monetary penalties would only poison these efforts.
Thank you for the opportunity to share these thoughts on the
importance of the employer-based health-care system. We respectfully
request this letter be included in the record of the hearing. We look
forward to working with you to enhance access to health care for all
Americans.
Sincerely,
David French
Senior Vice President, Government Relations
______
National Taxpayers Union
October 19, 2021
The Honorable Ron Wyden The Honorable Mike Crapo
Chair Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chair Wyden, Ranking Member Crapo, and Members of the Senate
Finance Committee:
On behalf of National Taxpayers Union (NTU), the nation's oldest
taxpayer advocacy organization, I wish to submit a statement for the
record for the Committee's October 20 hearing, ``Health Insurance
Coverage in America: Current and Future Role of Federal Programs.''\1\
NTU strongly believes that lawmakers should narrow their focus and work
towards closing health coverage gaps in a manner that favors the lower
costs and increased efficiency of private health coverage over federal
health programs. Unfortunately, some of the recent proposals from
lawmakers that would greatly expand Medicare coverage or enhance
Affordable Care Act (ACA) premium subsidies for six-figure households
would increase the taxpayer's burden for subsidizing health coverage in
the U.S. without meaningfully reducing coverage gaps.
---------------------------------------------------------------------------
\1\ Senate Committee on Finance. ``Health Insurance Coverage in
America: Current and Future Role of Federal Programs.'' October 2021.
Retrieved from: https://www.finance.senate.gov/hearings/health-
insurance-coverage-in-america-current-and-future-role-of-federal-
programs. (Accessed October 19, 2021.)
---------------------------------------------------------------------------
NTU's Stake in Health Coverage Policy
Given the nation's taxpayers heavily subsidize both private and public
health coverage, NTU has an important stake in the present and future
direction of federal subsidies for health coverage. Some context may
help frame our viewpoints and policy recommendations.
According to a Congressional Budget Office (CBO) study released in
2020, federal support for health insurance--for individuals under 65
alone (i.e., not including the cost of Medicare coverage for
individuals 65 and older)--was projected to total $921 billion in
fiscal year (FY) 2021.\2\ Nearly half of that support (47 percent, or
$433 billion) went to Medicaid and the Children's Health Insurance
Program (CHIP), programs designed to primarily support low-income and
disabled individuals. Just under a third of FY 2021 taxpayer support
for health coverage (32.9 percent, or $303 billion) went to the tax
exclusion employers and employees receive for employer-sponsored health
insurance. The remaining 20 percent or so of federal support went to
ACA marketplace subsidies (in most cases, premium tax credits (PTCs))
or Medicare coverage for individuals under 65.
---------------------------------------------------------------------------
\2\ Congressional Budget Office (CBO). ``Federal Subsidies for
Health Insurance Coverage for People Under 65: 2020 to 2030.''
September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
09/56571-federal-health-subsidies.pdf. (Accessed October 19, 2021.)
Put another way, the federal government currently spends (or foregoes
taxation on) nearly $1 trillion supporting the health coverage of
individuals under 65. These combined costs are projected to grow nearly
48 percent over the next 10 years--outpacing expected inflation--to
$1.36 trillion in FY 2030.\3\
---------------------------------------------------------------------------
\3\ Ibid.
Put yet another way--framing these costs over 10 years, as lawmakers
are doing with their reconciliation and infrastructure plans--federal
spending and subsidies for health coverage for individuals under 65
will total a staggering $10.8 trillion over the decade.\4\ This is
nearly double the reported cost of President Biden's original Build
Back Better agenda of $5.5 trillion.
---------------------------------------------------------------------------
\4\ Ibid.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Lawmakers' approaches to closing health coverage gaps and/or
subsidizing health coverage can have substantially larger budget
implications for taxpayers than the entire reconciliation package being
fiercely negotiated in Congress, making the Committee's hearing an
extremely important endeavor.
NTU Principles for Health Coverage Policy
As a taxpayer advocacy organization, NTU urges lawmakers to pursue
health coverage policies that adhere to two broad principles: (1) have
a narrow focus to closing health coverage gaps that prioritizes low-
income individuals who do not have access to subsidized care elsewhere,
and (2) pursue the lower costs and increased efficiency of private
health coverage over federal health programs.
NTU Concerns With ACA and Medicare Expansion Proposals
Unfortunately, several current reconciliation proposals violate both of
these principles while committing taxpayers to hundreds of billions of
dollars in additional health coverage subsidies over the next decade.
Premium Tax Credit (PTC) Expansion
NTU has warned for years that ACA premium tax credit (PTCs) expansion
is ill-suited to reducing coverage gaps in a cost-effective manner,
primarily for three reasons: (1) expansion is expensive (a $212 billion
deficit impact over 10 years, according to a 2020 estimate from the
Congressional Budget Office);\5\ (2) targeting generous PTCs to
households making six figures or more is a poor use of limited taxpayer
dollars; and (3) PTCs are not designed to bend the cost curve for
private health coverage, and will only increase in cost as premium
hikes outpace wage increases.\6\
---------------------------------------------------------------------------
\5\ CBO. ``Estimated Effect on the Deficit of Rules Committee Print
116-56, the Patient Protection and Affordable Care Enhancement Act.''
June 24, 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
06/Patient_Protection_and_Affordable_Care_Enhancement_Act_
0.pdf. (Accessed October 19, 2021.)
\6\ Lautz, Andrew. ``What's the Deal With Premium Tax Credits?''
National Taxpayers Union, September 23, 2021. Retrieved from: https://
www.ntu.org/publications/detail/whats-the-deal-with-premium-tax-
credits.
We have also demonstrated how, under House Democrats' PTC expansion
plan, an upper-middle class family of four that sees their income
steadily rise from $125,000 per year to $250,000 per year over a 15-
year period, earning $2.7 million over that time (or about $180,000 per
year on average), could receive nearly $60,000 in PTCs under the
reconciliation expansion plan.\7\ This would be an extraordinary
misallocation of taxpayer dollars, supporting the premium costs of an
affluent household that likely does not need taxpayer-funded
assistance. While a substantial portion of PTC dollars may still go to
low-income families in the form of refundable credits, we are seeing
some early evidence that a concerning proportion of PTC recipients
under the temporary, American Rescue Plan expansion of PTCs are making
above 400 percent of the federal poverty level (FPL)--over seven
percent (or 150,000) of 2.1 million HealthCare.gov enrollees from
February through August 2021.\8\
---------------------------------------------------------------------------
\7\ Ibid.
\8\ Department of Health and Human Services. ``2021 Final
Marketplace Special Enrollment Period Report.'' September 2021.
Retrieved from: https://www.hhs.gov/sites/default/files/2021-sep-final-
enrollment-report.pdf. (Accessed October 19, 2021.)
We would add that several design features of the PTC expansion increase
taxpayer subsidies of health coverage but may not meaningfully reduce
health coverage gaps, including but not limited to: (1) increasing the
value of PTCs for existing beneficiaries by reducing the proportion of
income that households are expected to contribute to insurance
premiums, including for individuals making above 400 percent of the
FPL, (2) allowing individuals to access PTCs regardless of income
level, (3) allowing individuals who received any unemployment benefits
in a year to access PTCs as if they made only 150 percent of the FPL,
and (4) limiting recapture of excess PTCs regardless of income. Given
the Joint Committee on Taxation (JCT) estimated that these provisions
for 2020-2022 alone would have a $45.6 billion budget impact,\9\ it is
conceivable that lawmakers seeking to make these policies permanent
could spend tens of billions of dollars over a decade subsidizing care
for individuals who already have or otherwise would have coverage.
---------------------------------------------------------------------------
\9\ Joint Committee on Taxation. ``Estimated Revenue Effects of
H.R. 1319, The `American Rescue Plan Act of 2021,' as Amended by the
Senate, Scheduled for Consideration by the House of Representatives.''
March 9, 2021. Retrieved from: https://www.jct.gov/publications/2021/
jcx-14-21/. (Accessed October 19, 2021.)
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Medicare Benefit Expansion
Depending on how lawmakers structure the timing of expanding Medicare
to dental, vision, and hearing benefits, and depending on how universal
lawmakers make the benefits, the 10-year costs of Medicare benefit
expansion may run up to $350 billion.\10\ This potentially significant
commitment of taxpayer dollars would not provide comprehensive health
insurance to a single individual in the country, but instead would
provide ancillary benefits to tens of millions of seniors, many of who
already have dental, vision, and hearing coverage through Medicare
Advantage.
---------------------------------------------------------------------------
\10\ CBO. ``H.R. 3, The Elijah E. Cummings Lower Drug Costs Now
Act.'' December 10, 2019. Retrieved from: https://www.cbo.gov/system/
files/2019-12/hr3_complete.pdf#page=10. (Accessed October 19, 2021.)
The reconciliation proposal would provide universal dental, vision, and
hearing coverage under Medicare Part B, but over 90 percent of Medicare
Advantage enrollees are in plans that offer some access to dental,
vision, and hearing coverage.\11\ What's more, of all Medicare
beneficiaries (in traditional Medicare and Medicare Advantage) the
median cost in 2018 for hearing care was $60, for dental care was $244,
and for vision care was $130.\12\ While we would not dispute that
dental, vision, and hearing care is health care, and while we would not
dispute the plain evidence that some seniors are in need of dental,
vision, or hearing care and struggle to afford it, the reconciliation
proposal misfires in providing a universal, taxpayer-funded benefit to
millions of beneficiaries who already have coverage for such services.
---------------------------------------------------------------------------
\11\ Freed, Meredith; Cubanski, Juliette; Sroczynski, Nolan;
Ochieng, Nancy; and Neuman, Tricia. ``Dental, Hearing, and Vision Costs
and Coverage Among Medicare Beneficiaries in Traditional Medicare and
Medicare Advantage.'' Kaiser Family Foundation, September 21, 2021.
Retrieved from: https://www.kff.org/health-costs/issue-brief/dental-
hearing-and-vision-costs-and-coverage-among-medicare-beneficiaries-in-
traditional-medicare-and-medicare-advantage/. (Accessed October 19,
2021.)
\12\ Ibid.
Together, the ACA and Medicare expansion proposals envisioned by House
Democrats could cost $553 billion, according to a recent CBO
estimate.\13\ While not every dollar therein would go to beneficiaries
who have access to coverage and care already, the above evidence
suggests that hundreds of billions of dollars at minimum would not
meaningfully reduce the coverage gap.
---------------------------------------------------------------------------
\13\ CBO. ``Re: Provisions in Reconciliation Legislation That Would
Affect Health Insurance Coverage of People Under Age 65.'' October 19,
2021. Retrieved from: https://energy
commerce.house.gov/sites/democrats.energycommerce.house.gov/files/
documents/Letter_
Honorable_Jason_Smith.pdf. (Accessed October 19, 2021.)
---------------------------------------------------------------------------
Lawmakers Should Focus Coverage Gap Efforts Narrowly
While numerous headlines and reports focus on the fact that nearly 30
million people in the U.S. are uninsured, few reports we have reviewed
provide a narrower focus on what proportion of that uninsured
population both (a) cannot afford any type of comprehensive health
coverage and (b) cannot access any subsidized health coverage under
current law and policy.
CBO's 2020 report, ``Who Went Without Health Insurance in 2019, and
Why?'' is instructive.\14\
---------------------------------------------------------------------------
\14\ For more, see: CBO. ``Who Went Without Health Insurance in
2019, and Why?'' September 2020. Retrieved from: https://www.cbo.gov/
system/files/2020-09/56504-Health-Insurance.pdf. (Accessed October 19,
2021.)
Of 29.8 million Americans uninsured in 2019, two-thirds (20 million
total) were eligible for subsidized coverage, either through Medicaid,
CHIP, employment-based coverage, or ACA marketplace subsidies.\15\
---------------------------------------------------------------------------
\15\ Statistics in this section are sourced from CBO's report,
unless otherwise noted.
Of the remaining 9.8 million Americans, who were uninsured in 2019 and
could access subsidized coverage, around 40 percent (4 million) were
not lawfully present in the U.S. NTU does not weigh in on immigration
matters, so we focus our analysis here on the remaining 5.8 million
Americans: those who are not covered by Medicaid but would be if their
state expanded Medicaid under the ACA (3.2 million) and those who have
income that is too high to receive ACA subsidies and also do not have
---------------------------------------------------------------------------
access to employer-sponsored care.
More recent estimates of the Medicaid coverage gap are closer to 2.2
million than 3.2 million,\16\ meaning that this is the population
lawmakers should be focusing on with new initiatives to close the
coverage gap. There is a major difference between attempting to provide
coverage to 30 million Americans (one in nine Americans) and 2.2
million Americans (less than one in 100 Americans). And a far narrower
problem calls for far narrower solutions.
---------------------------------------------------------------------------
\16\ Garfield, Rachel; Orgera, Kendal; and Damico, Anthony. ``The
Coverage Gap: Uninsured Poor Adults in States that Do Not Expand
Medicaid.'' Kaiser Family Foundation, January 21, 2021. Retrieved from:
https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-
poor-adults-in-states-that-do-not-expand-medicaid/. (Accessed October
19, 2021.)
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Lawmakers Should Focus on Cost-Effective Private-Sector Solutions
to Closing Coverage Gap
Some lawmakers are considering a federal Medicaid expansion proposal
that would cost up to $323 billion over a decade to close the 2.2
million-person coverage gap noted above.\17\ Unfortunately, substantial
research indicates that the subsidy cost per person for public health
coverage is much higher than private health coverage, and that public
health programs are subject to high improper payment rates that put
taxpayer dollars at risk. Policymakers may see fewer taxpayer dollars
do more to reduce the coverage gap by helping low-income Americans
obtain more cost-
effective private health coverage instead.
---------------------------------------------------------------------------
\17\ CBO. ``Re: Provisions in Reconciliation Legislation That Would
Affect Health Insurance Coverage of People Under Age 65.'' October 19,
2021. Retrieved from: https://energycommerce.house.gov/sites/
democrats.energycommerce.house.gov/files/documents/
Letter_Honorable_Jason_Smith.pdf. (Accessed October 19, 2021.)
The average subsidy per recipient of employer-provided coverage (ESI)
was $2,000 in FY 2021, according to CBO.\18\ Compare this to $5,640 per
recipient under Medicaid and CHIP. CBO projects that gap will narrow
over the next decade, but Medicaid and CHIP subsidies will still more
than double the average subsidy for ESI.
---------------------------------------------------------------------------
\18\ Congressional Budget Office (CBO). ``Federal Subsidies for
Health Insurance Coverage for People Under 65: 2020 to 2030.''
September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
09/56571-federal-health-subsidies.pdf. (Accessed October 19, 2021.)
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
In other words, ESI subsidies are far more cost-effective on a per-
recipient basis than Medicaid and CHIP. While the difference may be
explained by a number of factors, one worth considering is the
extraordinarily high improper payment rate in Medicaid.\19\
---------------------------------------------------------------------------
\19\ Improper payments are evidence that fraud or misuse of funds
may exist, but are not completely indicative of fraudulent payments or
other misdeeds. As CMS writes: ``Improper payments are payments that
did not meet statutory, regulatory, administrative, or other legally
applicable requirements and may be overpayments or underpayments.'' For
more, see: CMS. ``2020 Estimated Improper Payment Rates for Centers for
Medicare and Medicaid Services (CMS) Programs.'' November 16, 2020.
Retrieved from: https://www.cms.gov/newsroom/fact-sheets/2020-
estimated-improper-payment-rates-centers-medicare-medicaid-services-
cms-programs#_ftn1. (Ac
cessed October 19, 2021.)
According to 2020 data from the Centers for Medicare and Medicaid
Services (CMS), Medicaid comprised nearly two-thirds of all CMS
improper payments in Medicare and Medicaid in 2020, $86.5 billion out
of $134.2 billion.\20\ The Medicaid improper payment rate of 21.36
percent was 18.6 times higher than improper payments in Medicare Part D
and 3.1 times higher than improper payments in Medicare Advantage, two
subsidized health coverage programs that rely primarily on private
insurers.
---------------------------------------------------------------------------
\20\ Ibid.
And as health experts like the Galen Institute's Brian Blase have
pointed out, access to care (and not just coverage) in Medicaid raises
---------------------------------------------------------------------------
concerns for proponents of the program. As Blase wrote in 2020:
Coverage is not the same thing as care. A 2019 study by the
Medicaid and CHIP Payment and Access Commission, a
congressional advisory group, found that one-third of primary
care physicians and nearly two-thirds of psychiatrists do not
accept Medicaid patients. Doctors cite difficult Medicaid
paperwork, administrative burdens, and poor reimbursement rates
as reasons they do not accept more patients on the program.\21\
---------------------------------------------------------------------------
\21\ Blase; Brian; Adolphsen, Sam; and Turner, Grace-Marie. ``Why
States should not expand Medicaid.'' Galen Institute, October 6, 2020.
Retrieved from: https://galen.org/assets/Reasons-Not-to-Expand-
Medicaid-100620.pdf. (Accessed October 19, 2021.)
That said, closing the coverage gap is a laudable goal both on public
health grounds and fiscal grounds, if the problem and the solutions are
properly defined. Estimates for the cost of uncompensated or charity
care (the latter a subset of uncompensated care payments) vary, but
range from anywhere between $14 billion for nonprofit hospitals'
charity care (2017 estimate) \22\ to $41.6 billion for all hospitals'
uncompensated care (2020).\23\ CBO has found that ``it is likely that
being uninsured results in worse health outcomes, at least for some
people.''\24\ In short, there are societal and taxpayer costs to
millions of Americans wanting access to affordable health coverage with
no subsidized options available to them.
---------------------------------------------------------------------------
\22\ Bai, Ge; Yehia, Farah; and Anderson, Gerard F. ``Charity Care
Provision by U.S. Nonprofit Hospitals.'' JAMA Internal Medicine,
February 17, 2020. Retrieved from: https://jamanetwork.com/journals/
jamainternalmedicine/fullarticle/2760774. (Accessed October 19, 2021.)
\23\ American Hospital Association. ``Fact Sheet: Uncompensated
Hospital Care Cost.'' January 2021. Retrieved from: https://
www.aha.org/fact-sheets/2020-01-06-fact-sheet-uncompensated-hospital-
care-cost. (Accessed October 19, 2021.)
\24\ CBO. ``Who Went Without Health Insurance in 2019, and Why?''
September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
09/56504-Health-Insurance.pdf. (Accessed October 19, 2021.)
However, the evidence is clear that the private sector will have more
cost-effective solutions to reducing the coverage gap. Two avenues
where lawmakers should explore reforms and, possibly, support for low-
income Americans are (1) employer-
---------------------------------------------------------------------------
provided care and (2) consumer-directed health savings accounts (HSAs).
As noted above, taxpayer support for employer-sponsored insurance (ESI)
is far lower than subsidies for public health coverage. That said, the
tax exclusion for ESI is far from perfect. Some evidence demonstrates
the exclusion puts upward pressure on health insurance premiums, at the
expense of higher wages, and it is worth noting that 37 percent of the
tax benefit in 2018 went to households making 600 percent or more of
the FPL.\25\
---------------------------------------------------------------------------
\25\ Congressional Research Service. ``Tax Expenditures: Compendium
of Background Material on Individual Provisions.'' December 2020.
Retrieved from: https://www.govinfo.gov/content/pkg/CPRT-116SPRT42597/
pdf/CPRT-116SPRT42597.pdf#page=901. (Accessed October 19, 2021.)
Lawmakers could explore reforms to the ESI exclusion that more narrowly
target the benefit at taxpayers who need support and/or incentivize
businesses that currently do not offer ESI to low-wage or low-income
---------------------------------------------------------------------------
employees and contractors to do so.
HSAs are another promising and cost-effective route for lawmakers. JCT
estimated the costs of HSA tax subsidies for FYs 2020 through 2024 to
total $66 billion, an average of $13.2 billion per year.\26\ If the
average number of Americans contributing to an HSA hovers between 10
million and 12 million people per year,\27\ then the tax expenditure
cost per person is between just $1,100 and $1,320 per person. NTU has
outlined numerous ways that lawmakers can expand both access to HSAs
and the list of health expenses HSAs can cover.\28\
---------------------------------------------------------------------------
\26\ Ibid.
\27\ Ibid.
\28\ Lautz, Andrew. ``Ideas to Expand and Promote the Use of Health
Savings Accounts: An Alternative to Government-Run Health Insurance.''
National Taxpayers Union, October 21, 2019. Retrieved from: https://
www.ntu.org/publications/detail/ideas-to-expand-and-promote-the-use-of-
health-savings-accounts-an-alternative-to-government-run-health-
insurance.
---------------------------------------------------------------------------
Conclusion
In short, NTU appreciates that lawmakers are attempting to reduce
health coverage gaps, and we acknowledge that closing health coverage
gaps could bring benefits to society and to federal taxpayers. That
said, Congress should take care to narrowly define both the uninsured
problem that federal policies can fix and the big-picture solutions
that lawmakers should pursue to help people that truly need taxpayer-
funded assistance. Furthermore, those big-picture solutions should
focus on the cost effectiveness of private health coverage, rather than
public programs that come with significant cost, access, and improper
payment concerns. NTU is pleased to work with Committee members on
policies that adhere to these principles. Should you have any
questions, I am at your service.
Sincerely,
Andrew Lautz
Director of Federal Policy
CC: Members of the Senate Committee on Finance
______
Partnership for Employer-Sponsored Coverage
The Partnership for Employer-Sponsored Coverage is an advocacy alliance
of
employment-based organizations and trade associations representing
businesses of all sizes and the more than 181 million American workers
and their families who rely on employer-sponsored coverage every day.
We are committed to working to ensure that employer-sponsored coverage
is strengthened and remains a viable, affordable option for decades to
come. We urge caution in considering expansion of public programs to
safeguard employer-sponsored coverage in the years ahead.
Employer-sponsored coverage has been the backbone of our nation's
health system for nearly eight decades. Employers of all sizes
contribute vast resources to employees and their families through the
employer-sponsored system. Employers have a vested interest in health
care quality, value, and system viability. Employers have been on the
leading edge of health delivery innovation and modeling for decades.
Benefits offerings and coverage plans in the employer-sponsored system
are as diverse as employers and employees themselves. With self-insured
coverage under the Employee Retirement Income Security Act (ERISA), an
employer can tailor coverage to meet their workforce's specific needs
across state lines. They pay all health claims and bear the financial
risk and utilize third-party administrators (insurance carriers) for
daily plan management. Through the fully-insured state regulated
insurance market, employers purchase a prescribed benefit insurance
product sold in a state from an insurance carrier and does not bear the
full financial risk of claims.
Employers have led the way in benefits design and innovation for
decades and will continue to do so for decades to come. There is no
one-size-fits-all employer health plan, nor should the federal
government enact or implement laws that stifle an employer's ability to
develop benefits offerings that meet the needs of their specific
workforce. All levels of government should work constructively with
private-sector employers to ensure that employers have the tools and
flexibility to foster benefits design and innovations that provide
employees with benefits that are crucial to the well-being of
themselves and their families.
The foundation of the employer-sponsored coverage system is rooted in
workforce policy and business operations. Employers of all sizes offer
coverage for employee recruitment and retention, and the functionality
of a business is centered around a productive, thriving, and healthy
workforce.The ability to offer coverage to employees and the capacity
to operate a business for its core purposes are not mutually exclusive
functions. An employer offer of coverage is not merely a transaction in
which an employee fills out paperwork, enrolls in coverage, and
receives an insurance card; it is a multi-faceted fiscal and
operational commitment at the core of any business. As employers are
making the decision to offer coverage and determine which type of
coverage to offer their employees, a critical aspect of this
deliberation is the administrative compliance costs and complexities
associated with coverage.
While considering legislative and regulatory policy development and
implementation, federal lawmakers and regulators must understand and
appreciate the societal and economic commitments employers make to our
nation's workforce through the employer-sponsored coverage system. The
following policy and implementation questions should be carefully
considered in the context of today's hearing and future deliberations.
What would ``Medicare for All'' mean for employment? Recruitment
and retention of employees?
How would a Medicare or Medicaid buy-in program be an advantage
or disadvantage to employees and employers?
How would expansion of Medicare or Medicaid through a buy-in
effect current program beneficiaries and resources?
How would a Medicare or Medicaid buy-in program effect timely
access to providers and services for the influx of new beneficiaries?
How would the employee-employer relationship change by a
Medicare buy-in plan? Specifically with regard to working Americans
between 50-64?
What is a Medicare buy-in program striving to accomplish? Insure
a cohort of uninsured? Why not consider a firewall to protect employer
health plans?
How would a Medicare/Medicaid buy-in program effect take-up
rates for fully-insured employer-sponsored plans? How would it effect
other populations of employees?
How would the cost of existing employer coverage be affected by
an employee-option model for Medicare buy-in?
The Partnership for Employer-Sponsored Coverage opposes ``Medicare for
All.'' Dismantling our nation's private-sector employment-based health
system which provides coverage to the largest percentage of the
population would create utter chaos and massive disruptions to the care
system for all Americans. We urge Congress to devote its attention and
resources toward issues to improve our current health-care system, such
as increasing market competition, providing more coverage choices and
access to providers for all Americans, and addressing systematic cost
drivers and wasteful spending. Our public principles include:
Preserving the current tax treatment of employer-sponsored
coverage;
Promoting innovations and diversity of plan designs and
offerings for employees;
Providing employers with compliance relief from burdensome
regulations; and,
Protecting ERISA.
As a coalition representing business of all sizes, the Partnership for
Employer-
Sponsored Coverage has the unique ability to provide operational input
across the full spectrum of the employer system--from the smallest
family-owned business to the largest corporation. Employers have a
great stake in the development and implementation of health-care
policies. We stand ready to work with the 117th Congress in a
bipartisan manner to strengthen and preserve our nation's private
sector employment-based health system.
______
Patients Rising
700 12th St., NW, Suite 700
Washington, DC 20005
Statement of Terry Wilcox, Executive Director
Patients Rising is a national nonprofit organization dedicated to
advocating for the rights of patients with chronic and life-threatening
illnesses. We work at the community, state, and federal levels to
activate patients in support of reforms and legislation aimed at
advancing patient access to and affordability of healthcare.
The healthcare system in the United States has become complex,
expensive, and impersonal. To many Americans, it seems that any
healthcare policy debate has become nothing but a food fight between
politicians, providers, insurance companies, pharmacy benefit managers,
and the biopharmaceutical industry. What should be driving motivation
of this debate--the patient--is being drowned out by special interests
on all sides of the issue.
The American healthcare system remains the world's leading market-based
system that rewards scientific advancement and medical innovation. But
currently, there are too many barriers and entrenched interests working
against meaningful change in how healthcare is provided.
Patients Rising, through the Patient Access and Affordability Project
(PAAP), is working to empower patients, encourage advances in medicine,
and disrupt the payment landscape to accommodate innovation not only in
medicines that save lives, but also finding innovative ways to pay for
them.
During the October 20, 2021, Senate Finance Hearing, Health Insurance
Coverage in America: Current and Future Role of Federal Programs, the
areas where each party agrees to disagree are stark, but the places
where change for patients is possible exists. It is our aim to work
with Congress to advance patient-centered compromises.
According to the CDC, six in ten Americans live with a chronic disease,
and four in ten Americans live with two or more chronic diseases. At
the same time, between 25-30 million Americans are living with a rare
disease, more than 90% of those diseases have no treatment.
These are the Americans that Congress should prioritize when discussing
current and future health insurance coverage issues and reforms.
When pre-existing conditions were no longer a barrier to accessing
health insurance, this was a monumental moment for many Americans who
had been unable to obtain any insurance because of these conditions.
But now, those same patients are fighting for reasonable and fair
access. They stand there holding a card, that in many instances denies
the rightful access to the treatments and services they need. The
deductible is too high, the out-of-pocket costs are skyrocketing, and
the access to treatment is often limited.
When a patient is left with a relatively useless insurance card, the
pre-existing condition coverage becomes nothing more than a talking
point. The system has failed, denying those most vulnerable patients
meaningful healthcare.
It is true, 90% of Americans agree with negotiating with Medicare.
Those same Americans also want ready access to treatments when they
need them. There is no model where price controls would result in
maintaining world leading innovation and reliable access. For this
reason, we hope this Committee will fully support the following health-
care reforms:
1. Capping Out of Pocket Costs in Medicare Part D: Cap Medicare
Part D below $3,100. A $2,000 cap in Medicare Part D would be life
changing for the patients who find themselves in the catastrophic
coverage phase. It is a small percentage of patients, but those who
require this type of coverage often face extreme hardship. We have seen
caps anywhere between $2,000-$3,100, but all-in-all this is a
bipartisan solution that will help the patients who need it the most.
This overall cap coupled with a monthly out of pocket cap referred to
as smoothing, would go a long way in providing seniors with fixed
incomes and high drug costs some much needed relief.
2. Insulin: All brands of insulin should be available to all
patients at a fixed low cost. Insulin is a life-saving medication to
millions of Americans, and no one should be held hostage by the extreme
supply chain manipulation of the list price. The pharmaceutical company
net price has been decreasing in recent years, despite list prices
increases. However, what pharmacy benefit managers are making in
kickbacks and fees often pay for the insulin itself several times over.
This is an example of a supply chain that is failing patients because
of the perverse incentives that exist within it. In this instance--and
possibly EpiPen's as well--the pharmaceutical industry needs to sell a
product and the patient needs to buy it from the pharmacy counter. Any
entity in the middle purporting to save money for the system or
patients has failed abysmally at their job.
3. Benefit Design and Healthcare Finance: Price negotiations will
leave behind the sickest of patients. Therefore, alternative benefit
design policies should prioritize doctor-patient relationships. When it
comes to healthcare finance, there is a lot of discussion about price
controls and fines to curb pharmaceutical pricing and lower patients
out of pocket costs. There is no guarantee that this negotiation will
lower out of pocket costs at the pharmacy counter for anyone. Most
patients will not even notice. Negotiation is a false promise to the
sickest among us that polls well with many Americans who are not sick
or unhappy with their healthcare nor drug worried about their drug
costs.
Members of the Senate Finance Committee should be leading the way on
benefit design policy. Health insurance is a card for coverage. Benefit
design is a road to providing actual care for the patient. In many
instances the coverage (whether it is government provided, employer
provided, an off the shelf insurance plan, or something in between)
provides insufficient care for those who need it the most. As a nation,
we should be addressing these insufficiencies.
Ultimately there are three primary payers: the government, employers,
and patients. We recognize and acknowledge when a patient lacks access
to coverage that all the burden falls on them. It is for this reason;
we must simultaneously address the inequities in coverage. Everyone
else in the supply chain is providing a product or service or serving
as a middleman for oversight of benefits. Benefit design has become
more cumbersome for doctors and patients, leaving many doctors
prescribing not what is best for their patients, but what is covered.
And sometimes what is best, is not what is covered, and in many
instances, it is not even what is the most expensive--but you would
never know that from the formulary design.
Benefit decisions are driven by perverse financial incentives in the
supply chain, with little regard for the patients themselves. Again,
the doctor-patient relationship should be leading the change in benefit
design, not the patient-government or the patient-employer
relationship.
While medical innovation is unfolding rapidly, our current healthcare
finance system is not designed to accommodate it. We must change our
healthcare finance system to become more efficient, nimble, and
responsive to that innovation.
As America spends twice as much as other industrialized countries on
healthcare as a share of our economy. This is due, at least in part, to
the perverse incentives created by a dated hodgepodge of federal policy
that eliminates efficiency and creates excessive spending throughout
the system.
Patients Rising urges the Committee to consider the following
solutions:
1. Establish a healthcare finance and payment model that rewards
improvements in long-term care of patients.
Incentivize innovative insurance and finance
models that are designed to reward and encourage major breakthroughs in
therapies and cures, while keeping the costs to patients low.
Make doctors the primary force behind coverage
recommendations, and not flawed frameworks with little regard for the
doctor or the patient.
Ensure that doctors, nurses, and other healthcare
providers can make decisions independently to provide optimal patient
care.
2. Promote the market-based healthcare model that encourages
patient choice and maintains American leadership in life sciences and
medical innovation.
Audit policies and practices that can create
perverse incentives and lead to unnecessary treatments like surgeries
or other expensive procedures.
Establish transparency across the health system
to understand the actual drivers of healthcare inflation.
Encourage entrepreneurial disruption that leads
to the health system competing for patients, which would help lower
costs and improve the use of health resources.
Patients, not companies like pharmacy chains,
should benefit financially from the data collected on individuals.
Chairman Wyden, Ranking Member Crapo, and distinguished members of the
Senate Finance Committee, it is our pleasure and privilege to present
written testimony on this vital topic on behalf of Patients Rising. We
stand ready to serve as a resource and support the work of Congress to
protect patients.
______
Statement Submitted by Lee Stanfield
Lies and Distortions at the Senate Finance Hearing 10/20/21
Apparently, it would be more accurate to call the Center for Medicare
and Medicaid Innovation the ``Center for Medicare and Medicaid
Infestation'' since it clearly intends to infest Medicare with the all-
too-familiar ideology of ``Profit Over Patients'' (the covert slogan of
the for-profit parasites that are already so rampant in U.S.
healthcare).
For Representative Sheldon Whitehouse to imply that there are onerous
hoops physicians must jump through to be paid a fee for services
rendered, completely ignores reality, and reveals who he truly
represents . . . the big corporate vultures who generously fund him to
rip Medicare apart, so they will have better access to swoop in and
greedily scavenge yet another social safety net . . . thus securing
even more U.S. taxpayer money for their private coffers.
Whitehouse's claims are even more insulting in light of the fact that
the very ``Managed Care'' models he proposes are notorious for
requiring medical professionals to fill out onerous forms and jump
through numerous hoops just to get paid for their services. In fact,
most physicians prefer to deal with Traditional Medicare (as opposed to
Medicare Advantage or any other commercial insurance) precisely because
Traditional Medicare has always been so much more dependable and prompt
in paying for services rendered than any commercial insurance.
This is still the case, despite the understaffing due to the decades-
long yearly cuts to Medicare funding by our corporate-bought Congress,
and despite the previous appointment of Medicare saboteur Seema Verma.
Now we have Ms. Brooks-LaSure, whose previous career has been confined
to the favorite den of the for-profit parasites . . . Medicaid and the
ACA! Oh, how I long for someone who would just think outside that
infested box!
At 78, I have witnessed an ever-increasing number of stealth attempts
to privatize Medicare via the introduction of parasitic middlemen (as
in the Advantage plans) and the decades-long funding cuts to the
program on the part of the corporate-owned politicians in Congress.
Prior to this onslaught, Traditional Medicare was an excellent program
that patients and physicians loved!
Because (like the majority of U.S. residents) I still love Medicare, I
will not sit by and allow this newest outrage called ``Direct
Contracting Entity'' to be inflicted on Medicare! DCE is nothing more
than a thinly veiled attempt to infect Medicare with yet another
parasite to weaken it to the point where it can no longer adequately
serve seniors. Once their dastardly goal is achieved, then the same
corporate-owned politicians who infected Medicare with these fatal
parasites, will loudly claim that government-run Medicare cannot be
sustained and must be entirely privatized!
One of the for-profit concepts that has already been proven to be an
abject failure is the ``Value-Based Payment'' program (VBP). It has
failed to do either of the two things it was touted to do . . .
maintain or increase the quality, or lower the cost of healthcare.
Instead, the VBP model is nothing but a tool for incentivizing
providers to avoid taking on cases where the beneficiary is likely to
be costly to treat (such as those who are seriously, chronically, or
terminally ill). Of course, this discriminates strongly against people
of color and the poor in general. And this is the same result that the
DCE will generate!
But if Whitehouse wants to talk about onerous ``treadmills'' of
bureaucratic forms and other hurdles that take time away from actual
patient encounters . . . all forms of Managed Care and VBP are ``poster
children'' for that!
In truth, the unspoken underlying goal of the DCE is to destroy
Medicare as we know it by transferring financial risk onto providers
through up-front speculative lump sum payments, which will incentivize
providers to pay more attention to budgeting and cutting costs than to
patients' welfare. This is a stealth attack on Medicare! Step by step,
it will replace Medicare with an egregious system that values and
incentivizes profit over patients!
I say ``NO'' to this corrupt commercializing of Traditional Medicare! I
will be taking this fight to the public to make them aware of this
attempt to transform Medicare into a set of virtual ``Advantage Plans''
(or even worse) . . . plans that will little by little limit
beneficiaries' choice of doctors and other providers, increase the need
for prior authorizations, incentivize providers to under-treat,
``cherry-pick'' and ``lemon drop'' beneficiaries, and to spend less
time face to face with patients, while the cost of care continues to
increase every year in order to increase the profits of the already
ultra-wealthy!
All these privatized models are cash cows for profit-driven health
insurance companies at the expense of taxpayers! What you should be
considering and discussing is how to (as quickly as possible) get
Congress to pass and implement the most efficient, least expensive,
highest quality healthcare possible . . . original Traditional Medicare
expanded to cover ALL medical needs (including mental, dental, hearing,
vision, and long-term care) for EVERYONE nationwide! And it will SAVE
the U.S. hundreds of billions, and the average family several thousands
of dollars every year!
You should be STRENGTHENING Traditional Medicare instead of sabotaging
it with the likes of either DCE or VBP!
Lee Stanfield
______
Western PA Coalition for Single Payer Healthcare
P.O. Box 82528
Pittsburgh, PA 15218
https://www.facebook.com/westernpasinglepayer
Statement of Claire Cohen, M.D.
Countless studies show that the United States healthcare system is too
expensive and will continue to be without fundamental change. As you
have noted, American healthcare is a greater percentage of the GDP in
the US than in any other developed country. And it is growing greatly
as the costs of private health insurance is greatly growing. The
Congressional Budget Office (CBO) projects that the premium subsidies
to private insurance companies over the next 10 years will cost $553.2
billion. CBO also predicts that a single payer system will generate
$650 billion dollars in savings per year by 2030. CMS has overpaid the
private health insurers $143 billion in the last ten years. MedPAC
projects that Medicare Advantage plans cost CMS at least $8 billion
more than traditional Fee For Service Medicare in 2020 alone.
A recent report by the Commonwealth Fund revealed that the most cost-
efficient and highest quality state Medicaid Programs were the two that
have public, non-privatized programs; and that contracting Medicaid
health coverage to private insurance companies lowers quality of
service and increases cost. The Annals of Internal Medicine report that
over one third of all healthcare costs in the United States are due to
insurance company overhead and provider time spent on billing--that is
the private health insurance bureaucracy. Studies repeatedly find that
the administrative overhead costs for traditional Medicare is 2-3%, as
compared to private insurers (including Medicare Advantage and those
under the ACA) who have administrative overhead costs of 12% to 15%,
translating into a $400 billion annual savings under a single-payer
system.
Finally, an article by Christopher Cai published in PLOS Medicine on
January 15, 2020, looked at 22 studies that compared 10 year
projections for the financing of a single-payer healthcare system in
the United States with the projected 10-year costs for our current
multi-payer mostly privatized system. Regardless of ideology, no study
found single payer to be more costly. Twenty of the studies, including
one by the right wing Mercatus Center, found at least $2 trillion
dollars in savings; while two studies found the costs to be equal with
our current system.
What should be the conclusion from all of this wealth of information?
If congresspeople and government officials were not blinded by
neoliberal ideology and biased by the corruption of big-money
interests, the conclusion would be that the United States needs to get
private insurance totally out of healthcare and needs to implement a
single payer health system. Such a system would bring our healthcare
costs, quality and accessibility rapidly in line with those of other
developed countries. Such a system would ensure high-quality, low-cost
health coverage for everyone living in the United States without all
the administrative bureaucracy that we now have. Healthcare is a human
right and should be a public good.
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