Alex Azar told reporters that the CARES act, a coronavirus stimulus package passed by Congress, included $100 billion for health care providers who "will be forbidden from balance billing the uninsured for the cost of their care"MANDEL NGAN AFP/File
The tens of millions of Americans who lack health insurance will be covered by the government if they fall sick with the COVID-19 illness, the US health secretary said Friday.
Alex Azar told reporters that the CARES act, a coronavirus stimulus package passed by Congress, included $100 billion for health care providers who "will be forbidden from balance billing the uninsured for the cost of their care."
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Instead, hospitals and health care professionals will be reimbursed at the rates for Medicare, a state insurance program for the elderly.
Azar added that people who have recently lost their jobs and thus their insurance would be eligible for a special enrollment period under health care exchanges created by the Affordable Care Act, passed under former president Barack Obama.
President Donald Trump has spent most of his tenure trying to undo the law, also known as Obamacare, and the marketplaces created under it where a large portion of the previously uninsured population were able to get coverage.
The latest official figures showed there were 27.5 million people without health insurance -- but the current number is likely far higher after 10 million people filed unemployment claims in the past two weeks.
The US is alone among wealthy countries in linking citizens' health care to their employers.
Though state insurance, called Medicaid, exists for those in poverty, many people whose jobs don't offer coverage are unable to qualify for it because their income is over the threshold, even though they cannot afford to buy insurance on the open market.
The Trump administration has added numerous additional barriers to qualifying for Medicaid and as a result the uninsured population has grown by several million after falling to record lows right after the Obama era.
Public health experts have repeatedly warned that the uninsured may be reluctant to seek treatment, placing themselves at greater risk and fueling the spread of the disease.
“Idon’t knowif the hospitals are going to like me too much any more with this,” quipped President Donald Trump on November 15th. He was referring to two bold initiatives unveiled earlier that day by Alex Azar, his health secretary, to rein in America’s soaring health-care costs. The administration finalised a rule, to take effect in 2021, which will double down on its effort to bring price transparency to hospital care. And it put forward a new proposal, open for 60 days of public comment, that would force health-insurance firms to reveal confidential details of negotiated discounts with hospitals and doctors. It is the biggest shake-up of America’s $3.5trn health-care industry in years. And no, hospital operators are not happy.
Mr Trump’s first round of hospital reform required hospitals to make public the full list of costs billable to patients or their insurers. Hospitals previously held these so-called “chargemasters” close to their chest. Since January, when the reform came into force, they have taken to releasing convoluted spreadsheets with theoretical list prices for thousands of procedures, all couched in impenetrable medical jargon—transparent in theory but “useless” in practice, says George Nation of Lehigh University in Pennsylvania.
In need of radical surgery
The new rule goes further. It requires hospitals to disclose and update details, including gross charges, cash prices and negotiated rates, for thousands of services. They must also explain in plain English how much a basket of 300 common services (things likemriscans or hip replacements) will cost, including any extras and hidden charges.
In setting his sights on hospitals, Mr Trump is taking on a colossus. They accounted for nearly a third of America’s health-care costs in 2017, far more than the share of much-maligned drugmakers (see chart 1). The country has over 6,000 hospitals. Only 1,300 or so are private for-profit institutions; the rest are non-profit or government-run. The lack of an overt profit motive has done little to rein in prices, however. Hospital costs have risen at an annual rate of close to 5%, compared with below 1% for drug prices. Nor has a charitable mission dampened the ambition of bosses at big hospital chains; seven-figure salaries are not unheard of at those with revenues exceeding $500m a year. They have also been on an acquisition binge. The number of deals has jumped from around 55 a year between 2002 and 2009 to 90 or more these days. Since 2018 non-profit hospitals have been the acquirers in three-quarters of the transactions.
Early on, consolidation was fuelled by the passage in 2010 of the Affordable Care Act. Barack Obama’s health reform imposed red tape, such as a switch to electronic medical records, that some smaller hospitals found onerous. Moody’s, a ratings agency, thinks economies of scale and gaining leverage in negotiations with insurers are now the chief motive.
The merger wave has increased concentration and pricing power. Brent Fulton of the University of California, Berkeley, found that 90% of America’s hospital markets, representing a population of over 200m, were highly concentrated (see chart 2). Zack Cooper of Yale University, whose team looked at insurance claims covering over a quarter of Americans with employer-provided health insurance, discovered that prices at hospitals with a local monopoly were 12% higher than in markets with four or more rivals. A study by an insurance-industry body concluded that consolidation cut costs by 15-30% at acquired hospitals, but average prices for hospital services still rose by between 6% and 18%.
According to the American Hospital Association, a lobby group, operating margins in the industry rose from 4.4% in 2007 to 6.4% in 2017. But many hospitals in rural areas, which suffer from undercapacity, and in poor urban areas, which have lots of uninsured patients, barely break even or lose money. Big for-profit chains likehcaHealthcare, with around 180 hospitals, can enjoy high (if volatile) margins. Non-profit institutions often plough those gains into expansion or salaries.
Given this concentration, many experts are sceptical that transparency alone can rein in prices. Sherry Gleid of New York University observes that patients are often not price-sensitive. They are either in need of urgent care, with no time to shop around, or have insurance, and so pay a fraction of the full cost (often nothing beyond an annual out-of-pocket limit).
Insurers, for their part, care less about prices because they now make more money by managing health plans for self-insured employers than by managing risk. They may even like to see inflation rise, since they can take a bigger cut from a bigger base. A well-intentioned Obamacare rule forces insurers to pay out at least 80% of their revenue from premiums. But by capping margins, it encourages raising revenue, not efficiency—and higher costs can be used to justify higher premiums.
Others are more hopeful. Marty Makary of Johns Hopkins University, author of “The Price We Pay”, a new book about America’s health-care system, thinks that a small number of “proxy shoppers” can bring about powerful change once prices are revealed, even if most patients remain insensitive to prices. Dr Makary points out that in elective procedures likelasikeye surgery, cosmetic surgery orin vitrofertilisation, which enjoy full transparency, “prices fall and quality rises each year just like in every normal market.”
It is possible that prices may initially rise in some places as cheaper hospitals raise theirs once they realise how much peers in similar markets or pricier local rivals are earning. The Federal Trade Commission (ftc) has raised that troubling prospect—and hospitals have (self-servingly) echoed it. Hospital lobbyists report their clients are likely to sue the government over the new rules.
Larry Levitt of the Kaiser Family Foundation, a health-care think-tank, worries that many hospitals will ignore the paltry $300 daily penalty for scofflaws as a cost of doing business. But, he says, Mr Azar’s second proposal, to force disclosure of prices insurers actually pay, may prove potent.
The cost of insurance is growing unbearable for many. Nearly 180m Americans, more than half the population, are covered by employer-provided health insurance. The average family’s premiums have shot up by 54% over the past decade, far outpacing wage growth, and employers are shifting more costs onto workers through ever higher out-of-pocket payments and deductibles. Reformers hope that by making real prices and out-of-pocket costs available upfront in simple language, patients can shop for non-emergency services.pwc, a consultancy, reckons these make up about half of all medical services by volume (though less by value).
Why should hospital and insurance prices remain taboo, asks Dr Makary, when a corner of the health industry is already subject to strict transparency regulation? The Funeral Rule, enacted by theftcin 1985, requires undertakers to provide itemised and detailed price data. What is good for the dead is surely good for the living.■
This article appeared in the Business section of the print edition under the headline "Donald Trump wants hospitals to be more upfront about prices"
WASHINGTON - U.S. President Donald Trump moved to undermine Obamacare dramatically late on Thursday by cutting off subsidies to health insurance companies for low-income patients, sparking threats of legal action and concern of chaos in insurance markets.
The decision is the most dramatic action Trump has taken yet to weaken the Affordable Care Act, President Barack Obama’s signature healthcare law, which extended insurance to 20 million Americans.
The move drew swift condemnation from Democrats and threats from state attorneys general in New York and California to fight back with lawsuits.
Trump has been frustrated by Republicans’ failure to repeal and replace the law known as Obamacare, thwarting a promise he made during the 2016 campaign.
His decision is likely to please those among his political base who detest the Obamacare system, which many Republicans have attacked for years as an unneeded government intrusion in Americans’ healthcare.
In a nod to that same constituency, the president signed an executive order earlier on Thursday to make it easier for Americans to buy bare-bones health insurance plans.
Senate Democratic Leader Chuck Schumer and House Democratic Leader Nancy Pelosi derided the subsidies cut-off in a joint statement, saying Trump would single-handedly push Americans’ healthcare premiums higher.
“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” they said. “Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it.”
Insurers and proponents of Obamacare have implored Trump for months to commit to making the payments, which are worth billions of dollars. Several insurers have cited uncertainty over the payments in hiking premiums for 2018 or exiting insurance markets altogether.
Trump has made the payments, guaranteed to insurers under Obamacare to help lower out-of-pocket medical expenses for low-income consumers, each month since taking office in January. But he has repeatedly threatened to cut them off and disparaged them as a “bailout” for insurance companies.
With Treasury Secretary Steve Mnuchin standing behind him, U.S. President Donald Trump smiles while listening to remarks before signing an executive order making it easier for Americans to buy bare-bones health insurance plans and circumvent Obamacare rules at the White House in Washington, U.S., October 12, 2017. REUTERS/Kevin Lamarque
The White House said late on Thursday that it could not lawfully pay the subsidies anymore.
A White House statement said that based on guidance from the Justice Department, “the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare.”
“In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments,” it said.
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New York Attorney General Eric T. Schneiderman said in a statement he was prepared to lead other attorneys general in a lawsuit.
“I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,” he wrote.
“This summer, the courts granted our intervention to defend these vital subsidies and the quality, affordable health care they ensure for millions of families across the country. Our coalition of states stands ready to sue if President Trump cuts them off.”
Anthem Inc, one of the largest remaining Obamacare insurers, in August scaled back its offerings in Nevada and Georgia and blamed the moves in part on uncertainty over the payments.
Blue Cross and Blue Shield of North Carolina earlier this year raised premiums by more than 20 percent, but said it would have only raised premiums by about 9 percent if Trump agreed to fund the payments.
The payments are the subject of a lawsuit brought by House Republicans against the Obama administration that alleged they were unlawful because they needed to be appropriated by Congress. A judge for the federal district court for the District of Columbia ruled in favor of the Republicans, and the Obama administration appealed the ruling.
The Trump administration took over the lawsuit and had delayed deciding whether to continue the Obama administration’s appeal or terminate the subsidies, but in April Trump began threatening to stop the payments. That case became more complicated in August when a U.S. appeals court allowed 16 Democratic state attorneys general to defend the payments and have a say in the legal fight.
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