Better Way Forward plan for America’s healthcare system

So here it is, after hours of review and analysis, I’m laying out a Better Way Forward plan for America’s healthcare system. I have reviewed both the existing ACA, the Republican primary replacement plans (AHCA/BCRA), Center for American Progress, Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute, the Century Foundation, Senator Ted Cruz’s Consumer Freedom Amendment and the Cassidy-Collins Patient Freedom Act and pulled the best ideas from all into a reform package that would rest on top of the ACA and further support Medicaid, Medicare, the Children’s Health Insurance Program and has some spill over benefit for Tricare/VA medical services for veterans. So here’s the plan, in summary version. I’m still working out the cost estimates, but it’s something that hopefully can draw conversation and consensus in making the ACA better.  

Market certainty

·                    Defend and settle the existing cost-sharing reduction payment issues in House v. Price, making full payment to insurers for the money still owed them for 2016 under the ACA’s program for reinsuring high cost-claims, and settling the insurer lawsuits challenging the failure of the government to make risk corridor payments due insurers who lost money insuring consumers through the exchanges for 2014 and 2015. These are technical issues, but they involve billions of dollars in commitments that were made by Congress to insurers through the ACA. If the administration drops the defense of House v. Price, for example, insurers will lose $9 billion owed them for 2017 for reducing deductibles and out-of-pocket limits for 6 million low-income consumers covered by the exchanges. Insurers are very unlikely to return to the market for 2018 if these commitments are broken; some may even try to leave for 2017. 

·                    Pursuing initiatives to ensure market stability. The administration has proposed revisions of current rules to this end, but some of these are ill-advised.

• Pending proposals to reduce the length of time consumers will have to enroll in the individual market for 2018 or to
• Decease the paperwork burden consumers’ face in enrolling mid-year when they lose other coverage would discourage healthy people from enrolling and do more harm than good.
• Fully funding the enrollment efforts of HealthCare.gov can help maintain a vital individual insurance market.

·                    Enforcing the individual mandate as is for 2017 & 2018 periods. The mandate remains our primary means for encouraging healthy as well as unhealthy people to enroll in coverage. The CBO report on the Republican repeal plans projected that repealing the mandate would have increased the number of the uninsured by 14 million in one year.

Financial payers and participant pool growth - Making Health Care Affordable

■ (American Health Care Act/ Center for American Progress) Tax credits to help middle-income Americans who must purchase health insurance in the individual market afford coverage.  To help people buy insurance, if they do not have coverage at work or under a government program like Medicare or Medicaid, or through the Department of Veterans Affairs, the bill would offer $2,000 to $4,000 a year in tax credits, depending mainly on age. A family could receive up to $14,000 a year in credits. The credits would be reduced for individuals making over $75,000 a year and families making over $150,000. Means-tested tax credits to make insurance affordable for both lower- and middle-income Americans.

(Center for American Progress/with tweaks) Fixed Dollar age-adjusted tax credits for upper middle class families - Allowing individuals with incomes above 400 percent of FPL to gain access to tax credits, as long as the premiums they would have to pay for the second-lowest-cost gold plan cost more than 8.5 percent of household income. Thus assistance would not be linked only to the amount of income but also to the cost of coverage. Adoption of this proposal would improve access to affordable health insurance for moderate- to middle-income households. Yet its cost would not be open ended, as the number of households that would be eligible for coverage would rapidly diminish as income increased. Combine fixed-dollar, age-adjusted tax credits with ACA’s income-based tax credits. Middle-income taxpayers without access to employer coverage would at least be entitled to a fixed-dollar tax credits even if their incomes were too high to qualify for income-based credits. Credits would be age-adjusted to ensure that they reflect age-related premium differences. These could also phase out at higher incomes, for example providing no assistance above the ninetieth percentile for household income ($150,000 in 2013).

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Improving Tax Credit Affordability

For many Americans with modest incomes between 138% and 400% of the federal poverty level (FPL), the ACA’s affordability guidelines for premium tax credits are not affordable enough. Current tax credits require individuals and families with incomes below 200 percent of FPL to pay too much before tax credits take over. One consequence is that many low-income workers are declining subsidized employer-based and marketplace-based coverage. As a result, as many as 7.1 million (22%) of 32.3 million uninsured Americans are eligible for tax credits but choose not to use them.

Step 1 - Set a maximum 8.5% cap on household insurance costs, including for families with incomes over 400% of the FPL, the current ACA assistance limit

Step 2 - The premium tax credits be set to cover the cost of 80 percent actuarial value gold plans rather than the 70 percent silver plans. These researchers also propose that actuarial values be increased to 90 percent for individuals with incomes between 150 and 200 percent of FPL and to 85 percent for individuals with incomes between 200 and 300 percent of FPL.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Addressing Unaffordable Cost Sharing

Unaffordable levels of cost sharing face many families with private health insurance, including many in ACA exchanges/marketplaces. ACA-covered families with household incomes between 138% and 250% of the FPL receive cost-sharing protections, those with incomes between 250% and 400% of the FPL obtain premium support without cost-sharing protections. Many families with employer based coverage face even higher cost sharing.

Step 1 - Proposes to set the value of coverage at the more generous “gold” rather than the “silver” Exchange standard.

Step 2 - Offer a new tax credit of up to $5,000 to offset out-of-pocket costs greater than 5% of household income to ACA, Medicare Buy-In and Employer-Based Coverage recipients.

(Center for American Progress) - Increase Use of Health Savings Accounts for Moderate-Income Americans. Congress should align the requirements of the ACA and of the health savings account program and consider offering subsidies for health savings accounts for moderate-income individuals and families. This could make health care more affordable for millions of moderate-income Americans.

(Center for American Progress) - Allow Use of Health Reimbursement Accounts to Purchase Health Insurance. Congress should amend the Internal Revenue Code to allow small employers to use health reimbursement accounts, with appropriate safeguards, to help the employees purchase health insurance. This could make health insurance more affordable for millions of people.

(Cassidy-Collins Patient Freedom Act) - Roth HSA creation - The PFA would create “Roth HSAs” (A Roth HSA works much as current HSAs do, except that money deposited in the HSA is subject to taxation and only investment income on the Roth HSA and withdrawals for health care expenditures are free from taxation). At its heart are the Roth HSAs, into which either the federal government or a state (at the state’s option) would deposit funds that could be used to purchase health insurance and cover cost sharing. These deposits could take the form of refundable tax credits, advanceable on a monthly basis (and which would become taxable income). Any citizen or lawful alien residing in a state who is enrolled in a health plan and not otherwise covered by a federal health program (Medicare, Medicaid, VA, etc.) would be eligible. This apparently includes individuals enrolled in employer coverage, which would vastly expand the number of individuals receiving federal tax credits and correspondingly contract the size of the tax credits available to enrollees. The PFA explicitly appropriates the funds to cover the Roth HSA deposits to avoid the disputes over whether funds were appropriated that have resulted in litigation under the ACA.

(Center for American Progress) Allow employed parents greater access to the new marketplaces, and allow employers greater flexibility to offer—or not offer—health insurance coverage.

o   Remove the employee mandate and replace it with a coverage cost share model for employers with between 10 to 150 employees to buy insurance through the Marketplace for their workforce and split the premium cost between the employer, the Federal Government via tax credits or subsidy and the employee on a two tier model (40% Employer, 40% Federal Government & 20% Employee for up to 400% FPL/33.3% Employer, 33.3% Federal Government & 33.4% Employee).

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Fix the Family Glitch. Congress should clarify the legislative drafting ambiguity that led to the “family glitch,” or the White House should direct the Internal Revenue Service to interpret relevant sections of the Internal Revenue Code, so that working families are not excluded from marketplace tax credits. The so-called family glitch is an ACA provision that deems families ineligible for premium subsidies if the amount an employee has to pay to purchase individual workplace coverage is less than 9.56% of household income.

RAND Corporation researchers recently examined two alternatives for fixing the family glitch. The first approach would allow all family members, including employed family members with access to affordable individual coverage, to be eligible for the APTC if employer family coverage were unaffordable; the second approach would give only dependents access to APTC subsidies. (Alternatively, employees who lack access to affordable family coverage could be offered subsidized coverage to child-only policies.) Linda J. Blumberg and John Holahan of the Urban Institute performed similar analyses, and obtained consistent estimates.

The RAND team estimates that granting eligibility to all family members would allow 4.7 million people to gain access to subsidized coverage, reducing the uninsured population by approximately 1.5 million people, with an accompanying net federal spending increase of $8.9 billion, slightly less than a 9 percent increase over the current baseline of $104 billion. The second approach would allow 2.3 million people to gain access to subsidized coverage, with an accompanying net federal spending increase of $3.9 billion, and a corresponding reduction of about 700,000 in the number of uninsured.

Participant pools and actuarial risk

(ACA) Maintain the individual mandate requires most Americans to purchase health insurance coverage through the end of the 2020 open enrollment period. This remains essential to maintain a stable insurance market through 2020, yet would phase out to the Default Health Insurance Coverage Auto Enrollment model for the 2021 open enrollment period. The penalty model is not reaching the intended goal of moving persons to purchase insurance and the penalty fees are not enough to offset the cost of care for the average American.

(Cassidy-Collins Patient Freedom Act) - Default Health Insurance Coverage (complement to the Individual Mandate)

I would propose that we transition from the Individual mandate model to the Auto-Enrollment model outlined under the PFA, yet make this a mandatory enroll unless a person choses to opt-out (would have to submit formal Opt-out request through CMS). The Auto Enrollment model would start in 2019 as a compliment to the Individual Mandate and would apply for all special/initial enrollment eligible persons and would reach full implementation by the 2021 open enrollment period.

The PFA creates a new form of insurance, “Default Health Insurance Coverage,” in which the states would auto-enroll otherwise uncovered individuals who are non-compliant with the Individual Mandate. This would be a high-deductible plan that could be paid for from a Roth HSA. It would cover “Tier 1” prescription drug coverage for a limited number of drugs for chronic conditions, offer an adequate provider network as determined by applying Medicare Advantage guidelines, and cover childhood immunizations without cost sharing. Individuals could opt out of this coverage.

(Cassidy-Collins Patient Freedom Act) - Enrollment Periods – Supplemental to the DHIC & ACA Open Enrollment period with tweaks

States would be required to offer extra open enrollment periods to encourage continuity of coverage in the individual market, as well as limited special enrollment periods. They would be required to offer an initial open enrollment period of at least 30 days. Individuals would be auto enrolled into the DHIC plan and then during the open/special enrollment period would be allowed to enroll in coverage during this initial open enrollment period and subsequently upon birth, reaching age 26, or becoming independent from family coverage without underwriting.

Continuous Coverage Requirements

(American Health Care Act) The bill encourages people to maintain “continuous coverage” by requiring insurers to impose a 30 percent surcharge on premiums for those who experience a gap in coverage.

(Cassidy-Collins Patient Freedom Act) - Individuals who failed to maintain continuous coverage thereafter without a break of more than 63 days would be subject to medical underwriting, including denial of coverage, the imposition of pre-existing conditions differential premiums. These sanctions could continue for the number of months equal to the period during which the individual lacked coverage, up to 18 months. During this period the individual could, however, get default coverage. People who maintained continuous coverage could change plans each open enrollment period without medical underwriting, including presumably upgrading to more comprehensive plans if their health deteriorated.

States would also be required to impose a penalty on individuals who enrolled late in coverage (other than default coverage) equal to the lesser of 10 percent of the premium or 1 percent times the number of months during the previous two years that the person was uninsured (prior to the 18 months to which the continuous coverage underwriting sanctions apply). The penalty would be paid to the federal government.

(Cassidy-Collins Patient Freedom Act) - Guaranteed availability (but only if an individual has been continuously insured for the 12 months preceding enrollment. If an individual has not been continuously enrolled, premiums would have to be increased by 20 percent for each prior consecutive 12-month period during which the individual was without coverage for up to 3 times the length of the most recent time the individual was without coverage. States may seek waiver of this provision if they have alternative means of securing continuous coverage)

(Cassidy-Collins Patient Freedom Act)

·                    The requirement for coverage of mental health and substance abuse disorder services (with limited cost-sharing) as well as the extension of mental health parity rules to the individual market;

·                    The provision of Black Lung benefits for coal miners

(American Health Care Act) - New Bill Proposed by House Republicans Would Help Employers Find Out How Healthy Their Employees Are

The Preserving Employee Wellness Programs Act has been introduced by Representative Virginia Foxx (R-NC). This bill seeks to strengthen company wellness programs by making it easier for an employer to obtain personal medical and genetic data from employees and their dependents. The bill “would also significantly increase the financial costs faced by someone who does not join a company wellness program.”

Financial payers

(Center for American Progress) Delay implementation of the Spending control cap on premium subsidies from 2020 to 2026 - the federal government’s spending on premium subsidies, for the first time, will not be able to grow faster than the consumer price index, and individual premium payments will increase as much as 10% per year. This feature, included to control costs in the ACA’s second decade.

(Center for American Progress/with BCRA add on) Guaranteeing Obamacare’s cost-sharing reductions, which help make copays and deductibles cheaper for lower-income people who get insurance through Obamacare. Both Senate Republicans’ BCRA and the CAP plan would guarantee the CSRs. The dedication of continuous appropriation of funds for cost-sharing subsidies, would provide certainty to the overall marketplace. However, I recommend adding a growth cap for federal cost-sharing reduction spending, tying growth in spending to the consumer price index for medical care through 2030. Starting in 2030, growth in spending would shift from being tied to the consumer price index for medical care to the CPI for all goods.

(Center for American Progress/BCRA) Create a $30 billion annual “reinsurance” fund. It calls for giving states federal money to give insurers funding for their most expensive, high-cost enrollees — this could have a positive impact on reducing premium payments for everyone else on the exchanges. (CAP expert Spiro also notes that Maine and Alaska — two states with moderate Republican senators — have already adopted similar approaches in their states that have shown signs of success.) Because the reinsurance fund would reduce premium costs, and thus the amount of tax credits the government would have to pay out, the fund could have a reduction on potential cash outlays by 375% (example, $15 billion fund could result in $4 billion in cost outlays by the Federal Government). The BCRA bill would grant states the ability to reimburse insurance companies from the fund if medical claims of covered individuals are between $50,000 and $350,000.

(Center for American Progress) Give tax incentives to insurance companies who agree to cover patients in parts of the country where there is only one insurer (or fewer). One idea is to encourage insurers by eliminating the health insurance tax for plans that enter these markets, though Spiro said he’s open to other suggestions and tweaks.

(Former Gov. Howard Dean proposal) Medicare Buy In Option.  In ACA marketplaces that have 0 to 2 current providers within a county would allow for a Medicare Buy In option. Upon Buy-In, the purchaser would also have to enroll in one of the Medicare Advantage, Medicare PDP or Medicare Supplemental plans. Similar availability would be offered for within health insurance marketplaces to people over 55 years old (not covered under any other health insurance vehicle) and FTE’s at businesses with less than 10 employees

(BCRA/with tweaks) Medicaid expansion and managing spending growth:

What's in the bill: The Federal Government would fully guarantee the Medicaid expansion fund at 100% and allow states to expand Medicaid up to 150% FPL. Starting in 2025, every 5 years thereafter, Medicaid spending would have to be reviewed for spending & cost reduction opportunities to slow the spending growth rate for the next 5 years. This would be a continuing forecast.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Improve Medicaid Payment Rates. The Department of Health and Human Services and the states should take action to ensure that Medicaid payment rates are sufficient to ensure adequate provider participation. Medicaid beneficiaries need not only a guarantee of coverage but also of actual access to available providers.

Healthcare Process Improvement: 3 New Types of Healthcare Payer/Provider Financial Arrangements

Throughout the industry, payers and providers are formalizing financial arrangements that motivate providers to improve their processes—while benefiting payers, providers, and patients.

1. Pay for performance

The most basic of these arrangements is pay for performance (P4P). P4P is a straightforward incentive system that rewards improvement based on established metrics (and sometimes penalizes if the provider fails to hit the metric). For example, if a certain percentage of patients in a population get a particular kind of preventive screening during the year, the provider will receive the incentive payment. This kind of arrangement is a basic start that drives some improvement. But more elaborate shared-savings agreements are necessary to drive real, enterprise-wide transformation.

2. Bundled payments

In a bundled payment arrangement, a payer gives a single payment for all provider services that constitute an episode of care, regardless of how many providers were involved in that episode. Previously, each service would have been billed separately by the provider that performed it. This arrangement holds providers accountable as a group for their performance and motivates them to work together to eliminate duplication and waste.

Bundled payments are a good way for organizations to ease themselves into a shared savings agreement. Because the bundled payment focuses on just one type of care, like orthopedics, the organization isn’t taking on as much risk.

3. Accountable care organization (ACO):

Establishing an accountable care arrangement with a payer means entering into a total-cost-of-care system that rewards or penalizes based on the total cost of a patient population. These complex arrangements are growing even faster than bundled payments. There were approximately 500 ACOs as of year-end 2013. CMS announced 123 new ACOs that would start in January 2014. According to a Premier survey, ACO participation has almost quadrupled since spring 2012, and should continue to grow with participation projected to double by the end of 2014 to 50 percent of all hospitals participating.[1]

Structural & Regulatory Reforms through Governmental involvement in healthcare

(BCRA with tax credit feature) States can institute Medicaid work requirements:

What's in the bill: This would allow states to create a provision under which people must maintain employment, as the state defines, for a period, also determined by the state, for a person to receive Medicaid. An incentive for businesses to hire lower income workers, returning offenders or other persons who make up to 200% of FPL would receive an allowable adjustable tax credit of equal to 50% of the employees’ taxable liability if they are an FTE or 25% of the employees’ taxable liability if they are a permanent PTE.

(BCRA) A fund to provide grants to fight the opioid crisis:

What's in the bill: The updated draft bill would establish a $48 billion fund for states for programs to "support substance use disorder treatment and recovery support services for individuals with mental or substance use disorders." What it means: This is a one-time fund for 2018, but it is likely to be favored by senators from states hit hard by the opioid crisis.

(BCRA) No funds can be used for abortions:

What's in the bill: No plan purchased using funding from the bill could cover abortions. Additionally, none of the funds allocated by the bill could be given to healthcare providers that offer abortion services. What it means: In addition to restricting anyone who used the credits or other funds from getting plans that cover abortions, I would recommend removing the defunding of Planned Parenthood, yet work with them to better quantify the separation between their work on women’s health and this particular service.

(Center for American Progress) 2.) Hire a new corps of 10,000 full-time federal enrollment assisters to help Americans enroll in Medicaid or the new marketplaces.

Here is where navigators and other types of enrollment assisters enter the picture. During the first open enrollment period, there were some 4,400 assister programs with more than 28,000 staffers and volunteers who helped nearly 11 million consumers. A permanent, well-trained, federally funded corps of 10,000 additional full-time enrollment specialists would augment existing efforts. The annual costs of such a corps would likely exceed $500 million. That’s still less than $50 for every participant in the new health-care marketplaces.

(Donald Trump/ Democratic presidential candidate Hillary Clinton) Pharmaceutical cost control initiatives - the growth in pharmaceutical costs, one of the biggest drivers in increased insurance costs. President Trump has repeatedly said he’d like to help bring drug prices down, and many Democrats applaud those efforts. Allow the CMS to negotiate drug prices for Medicare, Medicaid and all ACA markets. Beyond the ACA debate, there's robust support among CEOs for aggressive policy action to curb the rapid growth in prescription drug costs; 74.4% said Medicare should be allowed to negotiate prices with drugmakers. And 78.2% said Americans should have access to cheaper generic drugs from other countries when there is a dearth of competing products.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Eliminate Medicaid Estate Recoveries from the Expansion Population. Congress or the states should prohibit estate recoveries from the expansion population. Individuals should not be discouraged from seeking the medical help they need for fear that, once they die, their beneficiaries may have to pay for the health care they received.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Ensure a Judicially Enforceable Right to Adequate Access to Medicaid Providers and to Adequate Medicaid Payment Rates. Recent court decisions have undermined the long-standing right of beneficiaries and providers to sue in federal court to ensure state compliance with federal Medicaid requirements. Congress should clarify continuing rights of access to federal court for Medicaid beneficiaries and providers to ensure that beneficiaries enjoy the access to care guaranteed them by federal law.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Raise or Eliminate Medicaid and Supplemental Security Income Asset Limits for People Living with Disabilities. The ACA does not impose asset limits for the Medicaid expansion population. Stringent asset limits remain, however, for individuals who qualify for Medicaid because of qualifying disabilities. States and the federal government should raise or eliminate these asset limits, which harm individuals with disabilities and their families.

Affordable Care Act – The following changes are slated for implementation over the coming years, as required by Obamacare.

·                    January 2017: “Grandmothered” health insurance plans become illegal. Grandmothered health insurance plans are individual health insurance plans purchased after the Affordable Care Act was signed into law (March of 2010), but before they became illegal, which was January 1, 2014. In some states, the deadline for these plans to be phased out was extended until 2017. 

·                    January 2018: All existing health insurance plans must cover preventive care and checkups without copayments.

·                    January 2020: The Medicare Part D coverage gap (“donut hole”) is phased out.

State Regulatory Reform Opportunities

Affordable Care Act – State by State Healthcare Reform experimentation through expanding use of the ACA's section 1332 "innovation waivers." These aim to encourage states to develop alternative mechanisms for health coverage, as long as they hew to Obamacare's coverage and affordability standards. This proposal doesn't require additional legislation. (Under current law and this legislation, states can apply for Section 1332 waivers to change the structure of subsidies for nongroup coverage; the specifications for essential health benefits [EHBs], which set the minimum standards for the benefits that insurance in the nongroup and small-group markets must cover; and other related provisions of law.)

(American Health Care Act) Under the bill, states could opt out of certain provisions of the Affordable Care Act, including one that requires insurers to provide a minimum set of health benefits, such as maternity care and emergency services, and another that prohibits them from charging higher premiums based on a person’s health status. Insurers would not be allowed to charge higher premiums to sick people unless a state had an alternative mechanism, like a high-risk pool or a reinsurance program, to help provide coverage for people with serious illnesses.

(Cassidy-Collins Patient Freedom Act) - Create a “basic health insurance” program to offer limited benefit health coverage for states that use the ACA’s section 1332 and use the AHCA Opt-out provision. This is one of the bill’s most creative proposals. Basic health insurance would have low annual limits as specified by regulation. Although the bill does not say this specifically, this coverage could also have low cost sharing since the insurer would be protected from risk exposure for high-cost claims. Many low-income people with limited assets might prefer low-cost-sharing, low annual limit coverage. Once an insured with limited benefit health insurance coverage reached the coverage limit, the insured would only be liable for the cost of subsequently incurred health care services to the extent that the bankruptcy valuation of the insured’s estate (taking into account exemptions allowed under the bankruptcy law) exceeded the annual limit on the policy.

The Cruz “Consumer Freedom Amendment” amendment (with tweaks) - Sen. Ted Cruz (R-Texas) is pitching an amendment that would allow insurers to sell plans that don't comply with ObamaCare regulations, so long as they also sell plans that comply with those rules. Cruz says his "Consumer Freedom Amendment" would lower premiums by giving insurers a path around the regulations. “As long as a health [insurer] offered at least one Obamacare-compliant plan in a state, [the insurer] would also be allowed to offer non-Obamacare-compliant plans in that state.” – State by state built in waiver option with limited market cap in terms of population that could buy into these plans.

(American Health Care Act)  The bill would provide states with $138 billion over 10 years that could be used for various purposes like subsidizing premiums, providing coverage to people with pre-existing conditions and paying for mental health care and the treatment of drug addiction.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Improve State Regulation of Network and Formulary Adequacy. States should adopt legislation or amend existing legislation to ensure that insurer networks and formularies are adequate and nondiscriminatory. Control over networks is a legitimate approach to controlling health care costs and ensuring provider quality, but networks must be regulated to ensure that plan enrollees can access necessary care and are not discriminated against because of their medical conditions.

(Democratic presidential candidate Hillary Clinton, the consumer advocacy group Families USA2 and the think tanks Urban Institute3 and The Century Foundation) - Improve Protection from Balance Billing. States should adopt legislation to protect network plan enrollees from balance billing when they access care in emergencies or through network providers. This is necessary to ensure that network plan enrollees are not burdened by crippling medical bills when they have not intentionally sought care out of network.

(Cassidy-Collins Patient Freedom Act) - The PFA would continue the ACA’s Medicaid expansion but would allow Option 2 states to switch expansion recipients into Roth HSAs. Option 2 states would also have to establish rules for limiting provider billing in emergency situations.

State Options Under The PFA

Having laid down these baselines, the PFA turns to the state options, its key innovation. The PFA would allow states to:

·                    Keep the provisions and requirements of the ACA, including access to the federal marketplace and including federal premium tax credits and cost-sharing reduction payments, but only funded at a level of 95 percent of the amounts that would have been available under the ACA;

·                    Establish a new “state and market-based alternative” based on federal deposits into individual Roth HSAs, described in the remainder of the PFA (the sponsors’ favored alternative), also 95 percent of the amount that individuals in the state would have received in premium tax credits and cost-sharing reduction payments under the ACA, plus the amount the state would have received through the Medicaid expansion if it failed to expand Medicaid. Roth HSA deposits would be income-adjusted with the deposits phasing out for individuals with income exceeding $90,000 a year and families with incomes above $150,000 a year. An individual would have to maintain insurance coverage to qualify for a Roth HSA or pay a 10 percent penalty on contributions. Individuals could contribute $5,000 per year to a Roth HSA in addition to the federal contributions (plus up to $1,000 more annually for individuals age 55 or above). Amounts in Roth HSAs would be excluded from assets when determining Medicaid eligibility.

As noted above, Roth HSA contributions would not be tax free, but the income from the Roth HSA would not be taxable and distributions could be made tax-free for medical care not otherwise covered by insurance including premiums; out-of-pocket expenses; long-term care insurance; and fees for direct primary care (direct provision of primary care by a physician or group of physicians for a prepaid fee, which is not to be regulated as insurance). Payments from a Roth IRA for other purposes would be subject to taxation plus a 10 percent excise tax except when an individual dies, becomes disabled, or becomes eligible for Medicare based on age.

(Cassidy-Collins Patient Freedom Act) - Establish a risk adjustment program that would apply to insurers in the individual market modeled initially on the Medicare Advantage risk adjustment program (subject to transitional provisions for new insurers). A risk adjustment program makes sense as a means for addressing adverse and favorable selection, but it would seem that in the absence of standardized benefits and cost-sharing designing such a program would be very difficult and would result in large transfers from inexpensive plans to more comprehensive plans.)

.

(Cassidy-Collins Patient Freedom Act) - Require health care providers to post prices for purchasing services from Roth HSAs. Payments cannot be made from HSAs to providers who fail to post prices. Health care providers would be prohibited from charging prices in excess of these amounts (or, if less, 110 percent Medicare payment rates or 85 percent of UCR for physician services) for services provided in an emergency.

.

(Cassidy-Collins Patient Freedom Act) - Grant HHS authority to waive any provision of the Stark self-referral law or state licensure or certification laws if doing so would increase competition within or reduce the cost or improve the quality of health care