I attended the International Foundation of Employee Benefit Plans (IFEBP) Legislative Update in Washington DC on May 21 and 22. I’ve been to a number of IFEBP conferences and always found them to be studiously non-partisan and instructional. This is the first Legislative Update I’ve ever attended and I found the mood to be dark and contentious. Perhaps it is the nature of this particular event or perhaps it is a sign of the times we are in.
The agenda covered legislative, regulatory and judicial activity around health care and pensions in the last 12 months.
Here is a summary of the healthcare presentations.
HEALTH LEGISLATION AND REGULATIONS
There were four attempts to repeal the Affordable Care Act (ACA) in 2017. All failed because fewer than 60 senators supported the bills.
There has, however, been significant regulatory activity, and health insurance premiums are climbing faster recently because of uncertainty in the marketplace.
The president signed an executive order on October 12, 2017 for the following:
The Department of Labor(DOL), Health and Human Services (HHS), and the Treasury Department were directed to write new rules loosening restrictions on “short-term” health plans. These plans were designed to be a bridge of no more than three months between full health insurance policies. The old rules made them non-renewable. They are cheap because they do not cover pre-existing conditions and are not required to cover “essential” health benefits defined as maternity care, pediatric care, substance abuse and more. The order now allows short-term plans for up to 12 months and allows them to be renewed. This will siphon younger, healthier people away from full-coverage plans.
DOL was instructed to expand the availability of “association” plans or “multiple-employer welfare arrangements” (MEWAS), not to be confused with Taft-Hartley multiemployer plans like Local 802’s plan. The (ACA) had required MEWAS to offer essential health benefits and to cover pre-existing conditions. The order would lift all restrictions; the employers can be in unrelated industries, scattered across the country and the MEWAS can be large, self-insured plans, immune from state regulations and not required to cover pre-existing conditions. They also will draw younger and healthier people away from the larger pool.
Cost Sharing Reductions (CSRs) were discontinued. CSRs are payments to insurance companies to offset co-pays and deductibles that lower income folks don’t have to pay. Premiums will likely rise as insurance companies try to recover that revenue by shifting the expense to their subscribers, further destabilizing the markets.
State innovation waivers are available and while many states under Republican and Democratic governments offer Medicaid expansion, the “innovations” under the waivers could expand or shrink coverage, depending on the political leaning of that state’s government. Up to now, state innovations had to meet or exceed the standards under the ACA, but under the current US administration, state systems with less comprehensive policies can be approved.
Public disapproval of the ACA has been influenced by ideology on both the right and left that push the “system is broken and has to be completely dismantled and replaced” narrative. The argument for a replacement has become binary: the right does not believe in collective insurance and the left is convinced that only a government-run single-payer plan is acceptable. Meanwhile,178 million people are getting their coverage through private employer plans, and neither side studies data on what is working and what is not working.
Synthetic opioids account for over 20,000 drug overdose deaths from 2000 to 2016. Prescriptions for opioids quadrupled from 1999 to 2014 and 80 percent of all painkillers are taken by Americans. Opioids cause dopamine levels in the brain to rise ten times higher than the next-most addictive drug, Employer-sponsored health insurance spent $2.6 billion on addiction treatment and overdoses in 2016, up from $273 million in 2004. The Mental Health Parity Act requires health plans to cover mental health, which includes addiction, at the same level as physical health. Compliance is uneven and some patients run out of benefits before the minimum yearlong course of treatment has run. There are also a number of unethical “rehab” facilities which are little more than group homes in attractive cities, do nothing to treat patients and charge health plans for very expensive drug tests which are carried out several times a week.
The response to the crisis has been tighter guidelines on prescribing painkillers and plan sponsors inspecting rehab facilities themselves.
G. William Hoagland from the Bipartisan Policy Center In Washington DC painted a bleak picture of federal spending, the national debt and how the interest on that debt is growing into a larger and larger share of the federal budget. By far, the largest slice of the federal budget is entitlement programs (mandatory spending). Spending for Medicare, Medicaid and other federal health care was about $1.14 trillion in 2017, Social Security and disability was $939 billion. The trust funds backing these plans are projected to bottom out beginning in 2025. Hoagland mentioned the “dials” available to bring these trends under control: spend less, raise revenue or both. As he talked about the unsustainability of inflation of entitlement spending, j began to notice angry muttering in the room. Hoagland went on to say that healthcare inflation is highest of all at over 6 percent a year and the trend is not sustainable, yet he hears talk of making all health care public, having a single-payer, government-run system and he feels that moves in the opposite direction that’s needed.
There were some heated questions and comments. Folks wanted to know why the presentation was so one-sided and why Hoagland seemed only to be interested in cutting back health and welfare programs. He hadn’t mentioned raising the cap on the payroll tax that finances the programs. He hastened to say that he thought the recent tax cuts were a terrible idea and that the only way to grow the economy out of deficit would be to invest in science, infrastructure and education. He said he’s equally disliked by Republicans and Democrats, though he identifies as a Republican.
I asked him about the slowing of increases in Medicare spending since 2010. According to the Kaiser Family Foundation (KFF) “Average annual growth in Medicare per capita spending growth was 1.3 percent between 2010 and 2016, down from 7.4 percent between 2000 and 2010.”
Though I didn’t expect him to endorse the Affordable Care Act (ACA) I wanted him to acknowledge the possibility of smart spending on health care instead of looking at it as only a choice between cutting back or increasing taxes. He said the flattening was a trailing indicator of the 2008-09 recession.
I don’t buy that and on the train ride home I did some digging. Again from KFF:
“Slower growth in Medicare spending in recent years can be attributed in part to policy changes adopted as part of the Affordable Care Act (ACA) and the Budget Control Act of 2011 (BCA). The ACA included reductions in Medicare payments to plans and providers, increased revenues, and introduced delivery system reforms that aimed to improve efficiency and quality of patient care and reduce costs, including accountable care organizations (ACOs), medical homes, bundled payments, and value-based purchasing initiatives.”
I hope we can all learn to look closely at our problems, figure out the root causes and try to find solutions that address those causes, rather than turning everything into a political culture war.
Coming soon, a summary of the pension presentations.