No Fake News Here-So Where is the Health Care System After 4 Weeks of the Trump Presidency?

16406937_1098787356917589_7943843917564142116_nI think we are all sick and tired of the media pointing out President Trump’s faults and inadequacies and Trump pointing out the media’s lies and ability to makeup fake news. Therefore, I thought that I would only report the real news.

The leader of one of the U.S.’s largest health insurance agencies—who has been saying for months that ObamaCare is on the ropes– said Wednesday that statistics indicate that the law has now entered a “death spiral.” Aetna’s CEO Mark Bertolini told The Wall Street Journal that the health law’s market is nearing failure because healthier people have dropped out while premiums continue to climb.

Health insurer Humana announced it is leaving the law’s public insurance exchanges for next year as it regroups after ending its proposed combination with rival insurer Aetna. Humana Inc. covers about 150,000 people on exchanges in 11 states.

The Trump administration took steps Wednesday intended to help calm jittery insurance companies and make tax compliance with former President Obama’s health law less burdensome for some. The administration’s actions signal a change in direction.

For consumers, the proposed rules mean tighter scrutiny of anyone trying to sign up for coverage outside of open enrollment by claiming a “special enrollment period” due to a change in life circumstances such as the birth of a child, marriage, or the loss of job-based insurance. Also, sign-up season will be 45 days, down from the current three months. For insurers, the curbs on special enrollment periods are a big item. The industry claimed that some consumers were abusing special enrollment by signing up when they needed expensive treatments, only to drop out later.

Aetna is considering reducing its presence in the markets set up by ObamaCare, Bloomberg reported. The insurer already reduced its footprint in four states after losing $450 million last year. Insurers also would gain more flexibility to design low-cost coverage tailored to younger people. In another move aimed at consumers who move in and out of coverage, insurers would be able to collect back premiums from customers who had stopped paying, then tried to sign up again for another year.

Separately, the IRS is backing off from a tighter approach to enforcement that was in the works for this tax-filing season. Under the law, people are required to have health coverage or risk fines from the IRS — a penalty usually deducted from a taxpayer’s refund. That underlying requirement remains on the books, and taxpayers are still legally obligated to comply, the IRS said.

But the agency is changing its approach to enforcement. Originally, the IRS had planned to start rejecting returns this year if a taxpayer failed to indicate whether he or she had coverage. Now the IRS says it will keep processing such returns, as it has in the past. Many of the law’s supporters consider the coverage requirement essential for nudging younger, healthy people into the insurance pool to keep premiums in check.

Hours after his inauguration President Trump signed an executive order directing federal agencies to look for ways to ease requirements of the 2010 health care law. The IRS said in a statement that it is following through, but “taxpayers remain required to follow the law and pay what they may owe.”

It was also recently reported by Yasmeen Abutaleb that U.S. healthcare costs to escalate over next decade. The cost of medical care in the United States is expected to grow at a faster clip over the next decade and overall health spending growth will outpace that of the gross domestic product, a U.S. government health agency said on Wednesday.

A report by the U.S. Centers for Medicare and Medicaid Services (CMS) cited the aging of the enormous baby boom generation and overall economic inflation as prime contributors to the projected increase in healthcare spending.

Overall healthcare spending will comprise 19.9 percent of the economy in 2025, up from 17.8 percent in 2015, the report forecast. The pace of growth in U.S. spending on health is expected to pick up in 2017, increasing 5.4 percent over 2016. That compares with an estimated 4.8 percent spending uptick in 2016. Spending for 2016 was estimated at $3.4 trillion.

When the final numbers are in, the growth in prescription drug spending for 2016 is expected to have slowed to 5 percent from 9 percent in 2015. However, CMS has forecast growth of 6.4 percent per year between 2017 and 2025, in part because of spending on expensive newer specialty drugs, such as for cancer and multiple sclerosis.

The projections for 2016 to 2025 were made assuming that the Affordable Care Act (ACA), former President Barack Obama’s signature healthcare law widely known as Obamacare, would remain intact. It does not take into account likely changes to the law.

The Republican-led Congress and President Donald Trump have vowed to repeal and replace the ACA, but a viable replacement plan has yet to emerge. Trump signed an executive order on his first day in office last month to freeze regulations and enable government agencies to take other steps to weaken Obamacare.

The ACA expanded Medicaid, the government health insurance program for the poor, in more than 30 states and set up private healthcare exchanges that enabled previously uninsured people to buy health insurance. After high enrollment between 2014 and 2015, Medicaid and private health insurance spending were expected to have slowed in 2016.

But spending on Medicare, the government health insurance program for the elderly, is expected to grow between 2017 and 2025 as a larger elderly population requires more medical services.

The overall insured rate of the population is expected to reach 91.5 percent in 2025, up from 90.9 percent in 2015, the report said.

So, what are the Republicans doing about it?? House Republican leaders shared general descriptions Thursday with rank-and-file lawmakers of how they’d propose replacing President Barack Obama’s health care law, with little detail. Highlights are based on a document distributed to legislators obtained by The Associated Press and interviews with lawmakers, aides and lobbyists:

MEDICAID: Phases out Obama’s expanded Medicaid coverage for more low-income people that 31 states accepted, which is nearly completely financed by federal funds. States could continue covering current beneficiaries for an undefined “limited period,” but the extra federal money would expire. The 19 states that didn’t expand would get additional money. In the future, states could decide to receive Medicaid money based on the fluctuating number of beneficiaries in the state and other health factors, or a lump sum.

OBAMA’S INDIVIDUAL MANDATE: Penalty for not buying coverage would end immediately. During transition away from Obama’s system of subsidizing most people who buy insurance on online marketplaces, younger people could get slightly bigger subsidies than today and those for older people might get smaller. That’s an attempt to draw younger, healthier people into insurance markets in hopes of stabilizing them that’s opposed by groups representing seniors like AARP.

TAX CREDITS: Available for people not covered by employers or government agencies. Paid in advance, refundable so people with little or no tax liability would get an IRS check. Higher credit for older people, not based on income. Not usable for plans that cover abortions.

TAXES: All or some of the Obama overhaul’s tax increases on high-earners, health care companies and others would be repealed. Taxes could be levied on the value of employer-provided health coverage exceeding $12,000 for individuals, $30,000 for families.

HEALTH SAVINGS ACCOUNTS: People could contribute more than current annual limits of $3,400 for individuals, $6,750 for families.

HIGH-RISK POOLS: States would get federal money to help people with costly conditions to afford coverage.

MEDICARE: Proposes no changes.

COSTS: No estimates provided.

So, will these ideas work?

First: House Republicans are debating a plan to replace the Affordable Care Act that would give consumers tax credits to buy insurance, cut back on Medicaid and allow people to save their own money to pay for health care costs.

The outline plan is likely to take away some of the financial help low-income families get through Obamacare subsidies, and also result in fewer people being covered under the Medicaid health care program for the poor. “In general this is going to result in fewer people covered nationwide,” says Caroline Pearson, a senior vice president at Avalere, a health care consulting group.

Republican leaders distributed the skeleton proposal at a meeting of the House Republican Conference in the Capitol on Thursday. Lawmakers now have an outline to bring with them to their districts for the Presidents Day holiday weekend, where they may face constituents with questions about what is going to happen to their health care. The plan is based on one outlined last summer by House Speaker Paul Ryan.

Rep. Bill Huizenga, R-Mich., called the 18-page outline “guideposts and a road map.”

“We know the direction we want to go and sort of the destination,” Huizenga said outside the meeting.

Lawmakers who attended the meeting said the plan is to repeal the Affordable Care Act with a bill similar to one that passed in 2015 but was vetoed by then-President Barack Obama. That proposal would have repealed all the taxes and subsidies associated with the health care law and would have killed the mandate for individuals to buy health insurance by getting rid of the tax penalty used to enforce it.

This Congress could either first pass a repeal bill and then a replacement bill, or include replacement elements in the repeal. The meeting Thursday centered on “principles and goals on where we’re going in patient-centered care,” said House Ways and Means Committee Chairman Kevin Brady, R-La., after the meeting.

“We’re talking about repealing, replacing and starting to return control of health care and restoring the free market,” he said.

Most of the plan is silent on how much money lawmakers want to put behind their proposals, so it’s impossible to know exactly how generous the plan is and how many people it would cover.

The elements of the plan include replacing the subsidies that help people buy insurance through Obamacare exchanges with fixed tax credits to buy coverage on the open market.

The major difference between the two is that the Obamacare subsidies increase as premiums rise so that consumers are responsible for the same premium amount, which is tied to their income. The tax credits proposed by Ryan are not tied to income but rise as a person ages and insurance rates increase.

“The important thing on the tax credits is that they’re not income adjusted and we don’t know how big they are,” Pearson says. She says it’s unlikely they’ll be as generous as the Obamacare subsidies. “This likely means that low-income people will have difficulty affording individual insurance,” she says.

The outline distributed by Republicans repeatedly mentions that people will be able to buy so-called catastrophic coverage, which has limited day-to-day benefits but protects people when they have a serious illness or accident that requires a lot of health care.

The plan also calls for expanding health savings accounts, which allow people to save their own money tax-free to pay for health care costs. It calls for the limits on HSA savings to rise from $6,750 per family to $13,100.

HSAs are a favorite among conservatives because they encourage people to save and plan for their health spending and to shop around for price. Democrats have criticized the focus on HSAs because they only help people who have extra money to put away and give a bigger tax cut to people with higher incomes. Something that I have also pointed out in my blog.

The Republicans’ plan also calls for a major restructuring of the Medicaid health care program for the poor. It would repeal the Medicaid expansion that most states adopted under the Affordable Care Act, which allowed able-bodied people with incomes just above the poverty line to become eligible for Medicaid coverage.

And it would cap how much the federal government spends per person per year. Right now, Medicaid pays all health care costs for those who are eligible.

“This is a potentially significant incentive for states to get serious about efficiency,” says Paul Howard, director of health policy at the Manhattan Institute, a conservative think tank.

Howard says states currently have an incentive to increase their spending on Medicaid, because it boosts the amount of federal money they get. Ryan’s plan would make Medicaid either a block grant program, where states receive a fixed amount of money, or it would be a per capita benefit, where the federal government would give the states a set amount for each beneficiary. States could still offer Medicaid to those who became eligible under expansion, but the states’ share of the costs would be higher than it is under the Affordable Care Act, likely making it too expensive for many states to do so.

Finally, the Republican plan would offer states pools of cash to come up with ways to expand insurance access to more people.

At this point Senator Rand Paul ran out of the meeting disgusted with the lack of any real plans and no real progress in developing a real working plan.

In thinking of the Health Savings Accounts I thought of this article which examines the perplexing psychology of saving for health care by Oivind Hovland.

Spending your own money on health care might mean that you’ll be more frugal with it. That’s the theory behind health savings accounts; a decades-old GOP concept that’s sparking renewed interest on Capitol Hill as Republican lawmakers look for ways to replace the Affordable Care Act.

HSAs are like personal savings accounts — with a difference. As with a retirement account, money put into an HSA can be invested, and any growth in the fund accumulates tax-free. Withdrawals can be made at any time, and they are tax-free, too — but the money can be used only to pay for certain medical expenses, such as health insurance deductibles, or for copays for hospital care or a visit to the doctor.

Currently, HSAs are only available to people who have high-deductible health plans, meaning they usually pay a few thousand dollars for medical care each year before their insurance kicks in to pay its share. While HSA participation is growing, only about 20 million people out of the 176 million who have health insurance participate in these savings accounts, according to a 2015 report by the Association of Health Insurance Plans.

Why don’t more people who are eligible for HSAs have them? For one thing, not everyone has money to contribute upfront. But psychologists and behavioral economists point out that even many people who have the extra cash on hand confront big psychological barriers to saving.

“How we think and feel is directly tied to our ability to make ‘good’ financial decisions,” says Alycia DeGraff, a board member and secretary of the Financial Therapy Association. DeGraff says when faced with financial decisions about the future, many people simply get stressed out.

“These stressors can become so overwhelming that … we can become debilitated and ignore the situation altogether,” she says. “Or we can practice any kind of defense mechanism — entitlement, suppression, overcompensation, isolation, etc. — to try and deal with [it].”

This may explain, at least in part, why middle-class Americans are pretty bad at saving money in general. Only about half of us have money in any sort of retirement account. And those of us who are parents have only saved, on average, enough to pay for about one year at an in-state college for our kids.

Saving money is hard. It means setting aside what we want now for something we think we’ll want or need later. And we live in a culture that offers a lot of pretty, shiny, things to buy RIGHT NOW.

Plus, we all pretend we won’t get old or sick.

“People are predictably irrational,” says Dr. Mitesh Patel, especially when it comes to money. He’s a behavioral economist, physician and assistant professor at the University of Pennsylvania’s Perelman School of Medicine.

But many of us really hate to lose money, Patel says, which is what makes the concept of HSAs is so appealing. For example, he and his colleagues published a study last year in the Annals of Internal Medicine on what motivates people to lose weight, and found that the way a financial incentive was framed made all the difference.

The researchers observed three groups of people for 13 weeks. They told one group to walk 7,000 steps a day. About 30 percent of the group did so. Meanwhile, people assigned to the second group were told they’d be paid $1.40 every day they walked 7,000 steps. About 35 percent of the second group did so.

Here’s the kicker: Each person in the third group was paid $42 upfront and was docked $1.40 each time they failed to meet their goal. Forty-five percent of that group met the assigned goal, Patel says. People hate to lose money.

Another way to encourage more saving might be to make HSAs operate more like the 401(k)s that required people who didn’t want to participate to actively opt out of the plan — rather than requiring people who want to contribute to opt in. “This creates a path of least resistance,” Patel says.

Of course, setting up and overseeing such a plan would likely cost the government some money, he notes.

People with HSAs do use less health care than those without such plans, a recent study from the Employee Benefits Research Institute suggests. But it’s unclear whether they actually improve their health. Prescription drug costs went down for people enrolled in HSAs in the EBRI study, but emergency room visits went up — particularly for lower-income families.

Then there’s the issue of figuring out how much you, as an individual or a family, would need to save for health care — it’s not easy to find out the average price for a medical test or procedure in your town, let alone how much that price varies from doctor to doctor or hospital to hospital.

“If you want to save for a house, you can pretty much figure out the math,” Patel says. “But if you go to a doctor, they don’t give you a menu for prices.”

To really increase their health savings — or any savings — we’d all need to change our mindset, says Degraff, the financial therapist.

“People would have to first take a dose of reality and get real about their future selves,” she says. Naturally, we think our future selves will be “better, healthier, more financially secure,” she adds. But, for many of us, health and income eventually decline with age. We need to save more now for later.

HSAs can be useful, Degraff notes, but only for those who have enough cash to pay their day-to-day expenses — plus a little left over.

“A lot of people don’t even have a regular emergency fund savings,” DeGraff says, “especially those that are already struggling to pay for health insurance.”

Will the Republicans ever come up with a plan that works? Not sure that they will get it right, but next week I will review the elephant in the room: Mr. Trump and what he could actually do to health care.

Let’s continue with non-fake news.

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