AFFORDABLE CARE ACT DEVELOPMENTS

International comparisons developed by entities such as the Organization for Economic Co-Operation and Development (OECD), which consists of 36 member nations, rank the United States as highest in health care spending, but doing considerably less well in achieving positive health outcomes for patients. Concerns about the cost of health care have resonated for decades on Capitol Hill, with the result that both legislative and regulatory initiatives either of an incremental or a broad sweeping nature (e.g., the Affordable Care Act) have been implemented in an effort to curtail health care spending. Nonetheless, the challenge continues to exist. A factor contributing to the cost dilemma stems from the regulatory environment as discussed below.

Cost And Consequences Of Complying With Hospital Regulatory Requirements
On July 31 of this year, the Senate Committee on Health, Education, Labor & Pensions (HELP) held a hearing to discuss reducing administrative spending in health care. The event was the third in a series of hearings focused on curbing health care costs. Witnesses included the president and CEO of a state hospital and nursing home association, the president and CEO of America’s Health Insurance Plans (AHIP), an economics professor from Harvard University, and an advisor to the American Action Forum. HELP Committee Chairman Lamar Alexander (R-TN) made reference to a 2017 report from the American Hospital Association (AHA), noting that hospitals and health care providers must comply with 629 different regulatory requirements from four federal agencies. Along with these agency require- ments, providers must follow other state and federal regulations. The AHA report indicates that compliance with non-clinical regulatory requirements collectively costs providers almost $39 billion a year. A typical community hospital, for example, must employ 23 full-time workers just to comply with Medicare regulations.

Individual Insurance Performance In 2018
An analysis from the Kaiser Family Foundation shows that despite significant challenges, the individual market remains stable and insurers generally are profitable. Insurer financial results from 2018 – after the Administration’s decision to cease cost-sharing subsidy payments, but before the repeal of the individual mandate penalty in the tax overhaul goes into effect – showed no sign of a market collapse. Premium and claims data support the notion that 2017 premium increases were necessary as a one-time market correction to adjust for a sicker-than-expected risk pool, and premium increases in 2018 were in large part compensating for policy uncertainty and the termination of cost-sharing subsidy payments. Without these policy changes, it is likely that insurers generally would have required only modest premium increases in 2018. Low loss ratios and higher margins indicate that some insurers over- corrected in 2018, raising premiums more than was necessary to cover claims and administrative costs and earn a reasonable profit. Even though repeal of the individual mandate penalty and expansion of loosely regulated insurance options will tend to drive premiums up in 2019, increases will be mitigated by this over-correction, and in some cases, premiums even will decline. Some insurers have exited the market in recent years, but in 2019, some insurers are reentering markets they previously had departed.

Final Rule Issued On Short-Term, Limited-Duration Insurance Coverage
The Departments of Health and Human Services, Labor, and the Treasury on August 1, 2018 issued a final rule to help individuals struggling to afford health coverage find new, more affordable options. The rule allows for the sale and renewal of short-term, limited-duration plans that cover longer periods than the previous maximum period of less than three months. Such coverage now can cover an initial period of less than 12 months, and taking into account any extensions, a maximum duration of no longer than 36 months in total. This action has an objective of helping increase choices for beneficiaries faced with escalating premiums and dwindling options in the individual insurance market. Short-term, limited-duration insurance, which is not obliged to comply with federal market requirements governing individual health insurance coverage, is aimed at benefiting consumers who are involved in a transition between different coverage options, such as an individual who is between jobs or a student taking time off from school, as well as for middle-class families without access to subsidized ACA plans.

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AFFORDABLE CARE ACT DEVELOPMENTS

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