Overview: This panel provided a high-level overview of health care coverage programs in the United States, such as Medicare, Medicaid, the Affordable Care Act, and employer-based insurance, as well as recent changes to coverage such as bolstering subsidies.
- Level-set on important metrics to track insurance coverage such as the national uninsured rates the populations covered under these programs, and trends in consumer affordability.
- Addressed questions of how money flows through federal health programs versus private
- Described how patients pay for care and interact with different forms of coverage
- Described how the major insurance programs operating in the U.S. interact with one another.
Robert Saunders, Ph.D
Orriel L. Richardson, J.D., MPH
Rodney Whitlock, Ph.D.
Good morning, welcome. Thank y’all for joining us. I’m Bailey Wilbanks, Federal Affairs Manager at the Alliance for Health Policy. Before we begin, I’m going to just run through a couple housekeeping items and then it’ll turn it over to our CEO, Sarah Dash. There is a Wi-Fi code on everybody’s table. Let us know if you’re having issues getting connected. I think all of the Alliance staff has these pins on, so just come and grab us.
You also have a QR code on your table that links to our webpage and has resources. It will have slides uploaded, an expert list and an agenda for the day. You also maybe see some of these fun sensory items on your table that’s for our fidgeters if you just need to, yeah, exactly, that’s perfect. I do want to emphasize that this event is not for attribution. We will be recording the panelists presentations, but we’re not going to record the Q&A remarks or have that on the website, just so y’all feel comfortable to ask questions about any of the topics you’re interested in.
The last thing is you have green cards on your table. During the Q&A, we’ll be roaming around with mics. If you want to ask your question verbally, just wave us down and we’ll give you the mic. If you’d rather write your question down, feel free to write it on those cards, wave us down, and we’ll hand it to our moderator and they’ll ask our panelists. We know you’re incredibly busy. Thank you all for joining us today. Now, I will turn it over to our present CEO, Sarah Dash.
Thank you. Thanks, Bailey. Thank you all so much for being here. This is our first in-person health policy academy since March 6th, 2020. How many folks had heard of the Alliance before Today’s meeting? Few, okay, some new, awesome. Here’s what I want to tell you, the Alliance is not only a resource for you but this is going to sound really cheesy, but I get to be cheesy because I’m the president.
The Alliance is really a family and we are your nonpartisan as unbiased as we can possibly be resourced for health policy, and the health policy community, which includes all of you, has been through, as we all know, an unbelievable amount of change since COVID began three years ago. It was a huge time of change for the Alliance too, we’re a 30-year organization. I just want to extend a warm welcome to you.
The pillars that make up the core of our organization are as follows. They are education, they’re thought leadership on emerging issues, they are convening solution focused dialogues and a strong commitment to bipartisanship. Starting from our founder, my former boss, Senator Jay Rockefeller of West Virginia who said, I think he was new to healthcare at one time, believe it or not, even though he became one of the people who was really known for prioritizing healthcare in the Senate.
He was new to the Senate Finance Subcommittee on Health 30 some years ago. He said, “I think that we could use some unbiased resources here.” He called up his colleague, Senator Jack Danforth, Republican from Missouri and said, “Will you like co-chair this thing with me?” That thus the Alliance was born. For 30 years, we’ve really stuck to that commitment and we really bring our pillars to life through panel discussions, nationwide webinars, curated salon discussions.
As well as our annual signature series, which this year, we’ll focus on envisioning a patient first health system. Our other programming this year will focus on mental health, clinical trial diversity, coverage, and the business of healthcare among other things. We look forward to engaging with each of you throughout the year. We’re a listen first organization and we take that very seriously. That means we want to hear from you, whether you’re a congressional staff or executive branch staff, about what your priorities are.
What information, education, and resources you need, how you would like to receive that information. Today’s event, the Health Policy Academy reflects the information, education and resources that we heard through our bipartisan listening tours on The Hill that are important to your work. We know health policies complex, these folks are fantastic, they’re going to be our first panel here to explain some of it to you.
There are a lot of nuances, it affects real people and we want to support you. I just want to make one key point here. We are unique and that we as an organization don’t lobby or advocate for particular policy solutions. We’re striving to serve as a resource to you so that you can make the best decisions possible when you’re deliberating on the complex health policy issues you’re dealing with. We know the job is not easy, it’s a stressful, it’s a high pressure environment.
A lot of us have worked on the Hill, a lot of the folks in our community have worked on the hill. You are doing public service. It’s hard, again we’re here for you. Thank you for the jobs you’re doing, and as you listen to the different sessions today, hope you take away information that will help you not only today, not only next week, but throughout your career. With that being said, I want to acknowledge and thank the Catholic Health Association of the United States and West Health for supporting today’s program.
We’re grateful for their partnership and sponsorship of the event over many years. In fact, the Catholic Health Association support has supported the Alliance and this event, this health policy academy nearly since the beginning. It used to be called the Bipartisan Congressional Health Policy Conference for staff. We changed it to Health Policy Academy because the latter was a little too much of a mouthful.
With that being said, let me please welcome Lisa Smith, who’s Vice President of Advocacy and Public Policy at the Catholic Health Association of the United States for some welcome remarks. Then, I’ll invite Amy Herr from West Health. Thanks.
Good morning, everyone. Welcome to the Health Policy Academy and to our distinguished panelist, many faces nice to see. As Sarah said, CHA has been co-sponsoring this annual event with the Alliance for over 20 years, and we are grateful for our new partner this year, West Health that is also co-sponsoring with us. Very thankful to the Alliance staff who does a yeoman’s job of putting the whole event together and pulling together panels and is just excellent and looks to be a wonderful panel again this year as well.
I just to provide a little background, Catholic Health Association, we’re the National Leadership Organization of Catholic Healthcare across the country. We have about 2,200 facilities across the country, hospitals, health systems, long-term care, clinics, and other provider services across all 50 states. About one in every seven patients a day enters a Catholic hospital just is admitted to a Catholic hospital.
Just to give you a little perspective on the size. We are the largest not-for-profit provider of healthcare in the country. We are very committed for our mission to welcome and serve everyone in need of care. One of the reasons we annually host this event is our commitment to ensuring that everyone has access to affordable quality healthcare. It has been our number one goal for decades, and we’re making progress slowly but surely to get to that point.
We also have, and that’s especially true for low income and vulnerable folks. We spend a lot of time working on the Medicaid program and trying to ensure that it’s both affordable and accessible as well as the Affordable Care Act in addressing the subsidies and the comprehensiveness of the program. One of the reasons that we also continue to push for comprehensive healthcare is our vision for the US healthcare system, which is really dedicated to improving and sustaining the health of our communities.
We’re very hopeful that this forum today will provide that background on both congressional and administrative, how it works, and some of the key issues in healthcare to provide everyone with that basis and also with opportunity for discussion about some of the key policies that may be addressed in Congress in the administration. Thank you all very much for taking the day to spend with us and we look forward to a robust conversation. Thank you.
Thank you, Lisa. Thanks, and now I’d like to welcome up Amy Herr, director of health policy at West Health to welcome you all today. Come on up.
Hi, everyone. I’m just going to really reiterate a lot of what Lisa said and what Sarah said. Welcome to the Health Policy Academy, we’re so glad you’re here. We have a huge thanks for Alliance for Health policy for putting this together and bringing together all the experts you’ll see today. Thank you very much. My name is Amy Herr. I’m the director of health policy for West Health.
West Health is a family of organizations focused on lowering the cost of healthcare and successful aging, specifically for low income older adults. We are nonpartisan non-profit organization. We have a small but mighty team in D.C. There’s four of us, but we have a bigger office in San Diego. One thing I wanted to just share with you is that we have a big partnership with the Gallup polling organization where we do polling of the general public around these issues every year.
We have a lot of great data that you could potentially use. One of our most recent findings, we did a big healthcare report card last year and we found that 44% of Americans gave the healthcare system a D or an F. That was surprising. I mean, not really surprising if you work in this field, but wow, 44%. We asked them each also to look at equity and quality and affordability and affordability specifically, 75% of people gave it a D or an F. It’s just shocking and something that we need to address.
For all of these areas. Everything was worse for women and for people of color and in the other underserved groups. I have a lot of data if you’re interested in that for any reason. Also, we focus on older adults. One of the things we found in our survey last year was that one in three older adults forgo basic necessities to pay for healthcare. This is food, transportation, things like rent, so they can pay for healthcare. It’s just unfortunate and we need solutions to address that.
We can be a resource feel free to reach out to me about any of this. Also, I wanted to let you know that West Health sponsors the Health and Aging Policy Fellows Program, which is we put about 15 policy fellows on The Hill every year and they look for placements in different congressional offices. Keep an eye out for that in the fall, and I hope you enjoy the day. Thank you so much.
Thanks, Amy. Now, it is my pleasure to introduce Rob Saunders. I think we knew each other back in the day on the house. We did on the house side, but we were doing environmental issues or something. How many people work on more than just healthcare? I did energy and water. I know nothing about energy and water, but Rob was my partner in crime.
Dr. Rob Saunders is now at the Duke-Margolis Center for Health Policy and he is going to be our fearless moderator for today’s first panel, which is going to focus on healthcare coverage in the United States. Rob, thank you so much for joining us and take it away.
Robert Saunders :
I’m going to stand up for my introductions and then sit down and turn things over to the panelist as quickly as possible. As Sarah mentioned, I’m Rob Saunders, I’m with the Duke-Margolis Center for Health Policy at Duke based in our D.C. office, and I have the pleasure today to moderate this panel looking at healthcare coverage, where do people get coverage in the US, and then what are the issues with each of those different types of coverage?
Between employer sponsored insurance, Medicare, Medicaid, the ACA exchanges, and of course more. What are those major issues? I’m really pleased to have four major experts on the panel with me today. I’m going to do a quick introduction because a proper introduction would take half of the time we have, but starting on my left and moving down, Orriel Richardson, is a VP at Morgan Health.
Morgan Health is an initiative by J.P. Morgan looking to use employer-sponsored insurance to improve broader healthcare coverage and he broader healthcare such as through advanced primary care. There she leads a group looking at health equity and policy. Before that though, she was on The Hill working in house waves and means during the hundred 16th and hundred 17th Congress as health council.
To her left is Rodney Whitlock, this is a slight change in the program from what you might have seen before, Rodney is a longtime expert and a variety of health policy issues in D.C. continuing our theme of the house, he worked on the house for representative Charlie Norwood, but also worked in the Senate for a number of years for Senator Grassley, both in his personnel office and on the Senate Finance Committee. He’s going to talk to us today about Medicare.
To his left, we have Becky Shipp. Becky has a substantial experience in health policy in DC as well, serving both in Becky Ship Consulting as well as being a VP of the Sheridan Group. She also is a Senate finance alum for a number of years. We’re having a continuation down the table here and rounding out our panel and really helping us think about things broadly is Cynthia Cox. Cynthia comes from the Kaiser Family Foundation.
When I was a young health policy staffer, I loved going to Kaiser Family Foundation because somebody would say, what is X? What is Medicare? What is Medicaid? Tell me about this stat there. And Kaiser has a great website. If you have not gone there to find those types of information out, she is going to help us think through the aca, the Affordable Care Act exchanges, as well as the uninsured. That’s how we’re going to do things, I’m really pleased we’re in person.
The last time I was here in person was in March 2020, and it is so much better to have these in person than webinars as much as I do love a good Zoom webinar. My charged you is that because we’re in person, please for the love of God ask questions and we’re going to engage. I can talk all day, but we’re not going to do that. We’re going to have each of our panelists talk and then we’re going to open up for questions.
We’re going to start with Orriel talking about how does the employer and system work, but also give us a nice context for how all sorts of coverage started. I’m going to give you a clicker.
Thank you. That’s me, good morning. This is a slide with a lot of words on it and if you can believe it or not, I condensed it greatly from the source material. I wanted to give you an anchor in the space of the healthcare system that we’ve inherited from the efforts to organize medicine and healthcare delivery in the early 1900s. I think I have provided you with a bit of a cheat sheet. There are some highlights to bring you to some of the moments in this timeline that I think are very much so illustrative of some of the positive gains that we’ve seen in the US healthcare system.
They also indicate some of the sticking points that we’ve yet to solve for in terms of how healthcare policy particularly is organized and delineated. As you can see around the middle of the 1900s, there’s a lot of activity happening and it really overlaps and coincides with larger growth in the US economy, the burgeoning middle class, and the desire for the United States to really retain the economic prowess that it was gaining.
The one theme that runs throughout this entire timeline is we are here to talk about health coverage in the United States, but as I tell some of my students at GW, we are working with a healthcare system that was never truly designed for the purpose of making people healthier and having them live their optimal lives. It was always reactive to different things. In the earlier part of this timeline, the oldest coverage in the United States, employer coverage really started from the desire to shield companies the industrial companies, the industrial age from hemorrhaging their workforce.
Those were very dangerous working conditions. You see a lot of the occupational health world and policy that was born out of that time. Then, you saw some health insurance conversations coalesced around hospitals as a necessary part of communities around the United States, particularly in rural communities and shoring up their ability to provide care while doctors and hospitals started this back and forth of who really controls the levers of how healthcare is going to be delivered and develop in the United States.
From those points, we had Medicare and Medicaid. As I alluded to the middle class largely, scholars say that Medicare was a byproduct of a desire not to have younger people go broke for taking care of their aging parents and to try to shore up the family circuit in that way. Similarly, Medicaid was not necessarily designed to care for then referred to as indigent, but it was really to make sure the hospitals weren’t hemorrhaging for providing uncompensated care to people who could not pay or did not have some source of co-insurance or form to pay for their care.
In the ’70s, things got really interesting because costs started to skyrocket and the idea of those places that Medicare, Medicaid, and employer sponsored insurance wouldn’t cover started really coming to bear. You had the expansion of long-term care and people with disabilities being covered under the public programs. You all will love this because you’re in Congress now, you had one of those bills that comes across and it takes you until midnight or two o’clock in the morning to get it through.
This one is known as ERISA, and it was intended to shield retirees from losing their pensions. There was, there were shenanigans afoot for different places, tinkering with folks pensions. If you think about what that does to a class of retirees, what impact that’ll have on the economy, it wasn’t sustainable. The issue with it is the broad way that ERISA is written, it covers all benefits that an employer provides to their employees. That includes healthcare, but the nuances of ERISA were not designed to necessarily address the complexities of healthcare in the ’70s and certainly not where we are now.
Then, you had EMTALA. EMTALA is you go to the emergency room, the hospital has to stabilize you before they can transfer you. They have a burden to make sure that they’re not just seeing people and putting them on the streets left to die. The real reason why EMTALA is one of the strongest levers that we have in the hospital space is because of liability. The lawyer in me says nobody wants to get sued, nobody wants to have those problems.
EMTALA is also not something that really is successful because of its impetus on making people healthy. It’s a shield to make sure that they’re protected from liability. From there, we had the ’90s work on some cost control mechanisms. You had the Clinton administration, which is so funny. I’m now like, “That was my childhood. I’m not sure you all were even born.” The Clinton administration worked on iterations of health reform, which were unsuccessful.
Subsequent to that, we did see Medicare diversify. We have Medicare Parts C and D added, and Medicare Advantage is now quickly becoming the hallmark of the Medicare program and is also a place of both competition, great successes and a little bit of controversy if you’re talking about pure spending. We also looked at the expansion through CHIP and some folks will talk more about that. The Patient Protection and Affordable Care Act known as Obamacare used to be pejoratively, but I don’t think so much anymore.
It really tried to rectify some of those highlights that I brought up when I took you through this abbreviated timeline, particularly thinking about how it’s sought to establish a floor for what benefits needed to be essential health benefits and did as much as possible to have the grandfathered plans incorporated into that. What does all that mean? All that means all that dysfunction, all of that circuit, all that complexity equals a whole lot of spending.
This slide is only intended to give you some data points, some nuggets that you can have your members talk around. The source is attributed to the National Health Expenditures Survey, but as you can see, the costs continue to skyrocket. They skyrocket more since you started trying to fix healthcare than they did before. It’s also a byproduct of technological innovation, the burgeoning improvements in clinical care, the diversification of where you can get your care, you can get surgeries at ASCs, ambulatory surgical centers, not just hospitals.
All of these things really just add another layer of complexity. The reason why Morgan Health, where I work was founded is because J.P. Morgan spends $2 billion a year on real estate. This is across the world. They also spend $2 billion on their domestic US healthcare healthcare burden. The idea of employers really trying to understand why their spend is out of control and why they seem to have so little recourse to address is one of the reasons why I decided to take the leap and go to the private sector and work on this issue.
Also, it is a byproduct of that ERISA law that I mentioned having a preemption clause. For those of you who don’t know what that means, it means your Medicare, your Medicaid plans, they still have to generally comply with the level of insurance regulations that the states put out. If you are a self-funded employer, you are not necessarily required to comply with those state level insurance laws. There is a lack of a lever in the ESI arena that exists in other parts of healthcare.
What does that mean in terms of, and I’m sorry, there’s an error on this slide, I was over-subscribed and did not send my edits, but the idea of the categories of ESI, we think about there are people who get their insurance from their employers, but not all employers are created equal. You have small, medium, large and jumbo employers. You have your mom and pop dry cleaners in your local community. You have a consulting shop or a lobbying firm that is small but mighty.
Then, you have your Boeings and your Walmarts and your J.P. Morgans. As the companies get larger, they tend to have greater problems complying across different state lines. Those are the employers, the large ones that usually have the capacity to self-fund, self-insure their plan. Those are the largest employers. Again, those are the ones that cross state lines, and it allows them to provide uniform benefits to their employees across state lines.
The issue with that though is again, those state laws that try to say one state might put a law in place to look at PBMs to look at some sort of pricing and do it broadly to affect any healthcare that’s offered in that state, they’re not necessarily applying to those self-insured plans. If the large company says, “Here’s our healthcare plan.” They contract with a Blue Cross Blue Shield, they united to deliver that plan to their beneficiaries, they pay the claims.
Oftentimes, they get insurance, stop loss insurance if they have some sort of large bills that their employees incur because of catastrophic health defense, but that’s how they handle it versus other employers, as you talk about coming down in size of employer. They don’t have the sophistication to have a dedicated group of folks who are working on designing a health benefits plan and then putting out a contract call and then working to contract with the plans.
They basically take the ones off the shelf that the health insurers offer in the space of employer sponsored care. Then, there are some that do some sort of hybrid of these things in a way. Those things are generally reflected on the slide. I also just want to note that the number of workers that are in these self-funded plans, I pull this from Kaiser because they are a great resource. It’s large and it’s not insignificant.
When you just think about the markets and you’re working on things with your members and you’re hearing from constituents, just remember there is a swath of employees that you don’t have a lot of levers directly absent, a very controversial and unlikely amendment to the ERISA law to do anything really in this space unless you are working on some type of oversight capacity with the Department of Labor. All that to say, there are 160 million Americans or more AHAP says up to 180 that rely on ESI.
Until we can really bring that swath of folks into conversations about health reform, health transformation, I don’t think that you’ll see the necessarily scale and all of the incentives in place to really move healthcare away from fee for service more towards value. I look forward to your questions and I’m handing this off to Rodney.
Thank you, Mario. All right. Let’s see how this thing works. Hit that button, that button. It would’ve been a great slide. Hey, that’s me. This is supposed to be Debbie Curtis. As you may know, I’m not. Debbie Curtis, my colleague called me last night with two questions. She said, “I’m having a dental emergency, can you show up and present the Medicare program in 10 minutes?” Then she said, “Can you remember to tell them that Medicare only provides a very limited dental benefit.”
Since it would happen to be relevant to her at that exact moment. I’m going to try to pick up her slides, do them justice in 10 minutes and maybe catch a little of the Medicare program as I go. We’ll start with this one, this is now, that’s got her name on it. The John Smith card and all that stuff. What’s Medicare? Medicare at the core is a federal social program created in 1965. Covers people who are qualified covering up to now, we think 65 million people.
Three categorical eligibilities age 65, you hit that magic birthday and you are Medicare eligible, under 65 and permanently disabled, that’s another pathway and end stage renal disease that’s an additional pathway. It is administered by the Center for Medicare and Medicaid Services. What we often refer to as CMS, Becky and I can argue over which of the M is silent. That’s the core there, characteristics on gender, race, and ethnicity.
Age group being a very interesting one, having just set up that it’s not just over 65. Medicare covers 13% of its population is actually under 65. That’s one thing to remember when we tongue in cheek, say Medicare, that’s the one for old people, not completely. Now, it is a small set of folks who do qualify for Medicare who are under 65. Characteristics particularly looking at them on income a little more deeply.
Now, that the bottom box there which gets into dual eligibility, is that there are folks who are eligible for Medicare who have low income, which may make them eligible for another program that’ll be Becky’s conversation. Again, the economic distribution of people eligible for Medicare. All right. Lastly, this one is medium per capita income by age characteristics. Again, breaking down and this becomes a conversation as you talk about, as a matter of policy, you have a lot of people talking about how much people have put in.
How much can they afford to pay, is a constant conversation in talking about the Medicare program, and this speaks to a little bit about, again, the economic diversity of folks on Medicare. This is the big interesting slide here. Let’s have some fun with this one. Medicare exists in four parts. We call them A, B, C, and D. Let’s start with Part A. Some people shorthanded hospital, it’s more than just hospital, but it is coverage of hospital services.
We’ll go beyond that to get into a limited skilled nursing benefit, some hospice care, some home health. There is a setup in terms of how it’s paid in premiums. You are immediately eligible for it at 65 automatically, and that you pay up to, she’s got written down here, $1,600 per benefit period in ’23, there’ll be additional cost sharing applied. Again, this is what we refer to generally as the hospital benefit. Part B, medical coverage or sometimes we shorthanded the physician benefit, although it covers more than just physicians.
Gets into issues of outpatient labs, physician services, some physician administered drugs are under the part B space a lot under there. You are eligible again at 65, you’ve got three months to enroll, you pay premiums based on that. You have standard deductibles, lots of math under there. At the end, we’ll talk a little bit about some resources. For staffers, one of the things you might want to look at to understand A and B is Medicare and U, because that’s what a lot of seniors will get.
You being familiar with what the folks who are getting the benefit receive has helped for you understanding how they understand it. A and B together is what we refer to as traditional Medicare. Your grandparents, Medicare, the Medicare, as we used to know it. Medicare is evolving with Part C, the Medicare Advantage Program. Medicare Advantage has grown as Medicare has turned over to private insurance plans, the ability to provide similar coverage to A and B with different sets of structures for premiums, eligibility in terms of what benefits are eligible.
If you might get a little more dental, if you are on a Medicare Advantage program. Just a different way of providing it is growing significantly and of significant interest because it is growing within the Medicare program. Part D, D as in drugs. In 2003, Congress added the prescription drug benefit to the Medicare program. Over the period of time that since then in the last 20 years, can you get over that? 20 years since the passage of the Medicare Modernization Act, we’ve seen a number of changes to that to try to, again, make drugs more accessible for seniors who are on the program.
Now, most important thing to remember about this slide and to understand how Medicare works. Medicare in its daily operations are designed by an August body of experts, free from political pressures who are trying to make good decisions about how the program should work, right? No, Medicare is designed by Congress and everything about the Medicare program. I’m going to say that again, everything about the Medicare program is a function of a congressional decision.
When that person is in there advocating to you about how Medicare should do something that’s not currently doing, that then is an opportunity for Congress to make a change. Is it rational? Doesn’t care, it’s Congress you guys know that, that’s how it works. It’s from, again, designed and operates as Congress intended to intended it to. If you look at, again, a late decision in the Supreme Court last term, they arguably create an additional limit on how much CMS has freedom to be able to broadly interpret what Congress says about how the Medicare program should work really important to remember.
Now, the way Medicare is administered is directly a function of how Congress wants it to be administered. That’s the important thing to know again, pulling all four of the parts together, all of them created by Congress, all of them administered as Congress intends. Talk a little bit about more about Medicare Advantage, just to make sure that you’ve got this in mind. Medicare Advantage is growing like Kudzu. If you’re in the South, you got that. If you’re in the North, you got to learn what Kudzu is because it’s coming for you.
It’s growing fast, it will be very soon projected to have more people in the Medicare Advantage Program than in traditional Medicare. That’s why you’ll hear a lot of attention drawn to the Medicare Advantage program. How is Medicare financed? There is a dedicated trust fund, the Hospital Insurance Trust fund. There’s a dedicated payroll tax that each of us pay that goes to pay for the Medicare program is generally directed towards theoretically the hospital side. Parts B and D are funded through a supplementary insurance trust fund, we call it general taxpayer revenue.
Medicare is funded in a quirky way out of two different sources, which arguably again, leads to differences in the way A and B are administered, which is again, Congress’ fault because they decided so. If you think this is crazy and you want it to be done differently, all Congress has to do is change it. It’s been a long time, it hadn’t changed that should tell you something. Top Medicare issues, Debbie, put these down here for me to talk about Medicare solvency.
We’re going to talk about Medicare solvency that’s attached to the Part A trust fund. How much money does the Part A Trust fund have to pay for Medicare? When does it run out? Budgetary impacts, Medicare takes up a lot of the budget. Why? We’re going to be spending the whole day talking about it. If I explain it to you now, then you’ll just leave. It has a significant budgetary impact. Medicare Advantage and the program payments associated with that.
With Medicare Advantage growing as large as it is, if you’re concerned about these first two bullet points, you got to want to know how Medicare Advantage is spending the money. You’re going to see a lot of attention to that right now going on in the halls of Congress about are we good with how Medicare Advantage is paying because we’re a little concerned about Medicare Advantage plans making money and maybe we don’t want them to be making as much money you’ll see a lot of attention to that.
Then of course, within Inflation Reduction Act, the implementation now ongoing of a Medicare prescription drug price negotiation process, which is going to take up a lot of head space. People try to figure out how to do it for what is starting now as a limited set of drugs, but it’s setting the precedent for maybe more later on. You might notice what’s not on this list. Is it working for the people who are in the program?
That’s the challenge that you’re going to face. The constant conversations about the finances of Medicare often blow out conversations about does it actually work? Are people being provided quality of care? That’s one thing that again, has to elbow its way into conversations because these things matter so much in terms of engaging the finances of the conversation. We’ve put together a number of resources here. We would suggest you listen to, we put the obligatory KFF to call Cynthia on the end here. Any other questions ask me later in two, one, Becky.
Dr. Whitlock, let’s see if I can make these work. Here we go. Good morning, everybody. I’d like to thank you for being here today and thank the Alliance for Health policy for having us here today. Just a reminder, my name is Becky Shipp, and I spent over 20 years working across the street there for the Senate Finance Committee under Chairman Chuck Grassley, and then under Chairman Warren Hatch. During my time on the Senate Finance Committee, I worked on Medicaid and CHIP issues as well as managing the human services’ portfolio.
I’m here today to give you the basics of the Medicaid program. First off, I need a little disclaimer, my comments here today do not reflect the views of my former bosses or my current clients. Second disclaimer, there is no way on earth I’m going to be able to explain the entire Medicaid program to you in 10 minutes. What I can do is arm you with some terms and some basic knowledge to try to get you through the first dozen meetings you might have on Medicaid.
As a former health staffer, I’ll tell you when I first started on working on Medicaid, I was in Senator Hatch’s personnel office at the time, I spent half my time in meetings writing down acronyms to look up later. It’s a little secret. Everybody on The Hill has done it, except probably Dr. Whitlock. He was born knowing Medicaid. Here we go, the classic definition of Medicaid is that it is a federal state program that provides an individual entitlement to health coverage for certain populations.
Let’s break down what that means. An individual entitlement means that as long as a person qualifies for Medicaid coverage under Medicaid, that must be provided for them. There is no federal cap on the number of people at any point in time who are eligible for Medicaid. In order to participate in the Medicaid program, states have to follow some federal guidelines, but states have a tremendous amount of autonomy in how they structure their programs.
There’s a saying among folks who work on Medicaid that if you know one state’s Medicaid program, you know one state’s Medicaid program, states have flexibility in determining who can get Medicaid, what types of services they can perceive, and how much providers for those services are paid. The federal government reimburses states for Medicaid services under which is through what’s called FMAP. That’s one of those in acronyms. The Federal medical Assistance percentage.
FMAP is calculated based on the average per capita income for each state compared to the national average. No state has an FMAP rate lower than 50%, and some states have an FMAP rate as high as 70%. For certain populations such as the ACA expansion population, that rate is currently 90%. One thing for you to know, federal policy makers i.e. Congress will often increase the FMAP rate to support policies they wish to advance.
It’s also important to note that a state’s FMAP is also proxy for a number of types of federal reimbursement for programs like foster care, child support enforcement and others. Medicaid accounts for roughly 16% of national healthcare spending in any given year. Medicaid was established in 1965. Early on, Medicaid was linked to the entitlement for cash assistance known as welfare, otherwise known as the Aid to Families with Dependent Children, AFDC.
A number of changes, which we have no time to go through, were enacted over the years, mainly through the budget reconciliation process. In 1996, when Congress ended the individual entitlement to welfare, the link between Medicaid and AFDC was also ended. In recent years, Congress has allowed states to create certain benchmark plans for Medicaid beneficiaries. In 2010, as part of the ACA, Congress expanded eligibility under Medicaid for certain low income adults along with other changes in Medicaid.
Medicaid was conceived as a program to support low income children and pregnant women. While the current Medicaid population has expanded, the main way people are eligible for Medicaid is through their income. For purposes of Medicaid eligibility, income is measured by what’s called the Federal Poverty Level or FPL. The FPL is basically the annual household income. For example, in 2023, the FPL for a family of four at 200% of federal poverty is $55,500. Every year, the federal government updates the federal poverty guidelines.
The majority of eligibility groups in Medicaid include children and pregnant women, the elderly, people with disabilities, and certain low income adults. Under current law states can require eligible populations to submit documentation confirming their eligibility in Medicaid. This is called redetermination. One of the things you may be hearing from constituents are issues associated with the so-called Medicaid unwinding. During COVID, states received additional Medicaid dollars, but could not disenroll anyone involuntarily from Medicaid.
This continuous eligibility requirement ended early this year. States are working through how to confirm eligibility for the current Medicaid population. It’s estimated that as many as 15 million people will lose coverage under Medicaid, including about 7 million who are eligible but did not re-enroll. In order to receive what’s called Federal Financial Participation or FFP from the federal government states that run a Medicaid program.
Note, no state has to run a Medicaid program. States must provide a menu of mandatory benefits. These include doctor visits, nurse facility services, something that’s called EPSDT, Early and Periodic Screening, Diagnostic and Treatment services for those under the age of 21. Home health services, inpatient, outpatient hospital services, birth center services, services through federally qualified health centers, FQHCs, and lab and x-ray services, not dental.
Let’s continue on the dental theme. Optional benefits include home and community based services, prescription drugs, inpatient psychiatric care, occupational therapy, hospice care, community supported living arrangements, chiropractic services, dental services are optional clinic-based services and eyeglasses. Most Medicaid beneficiaries are enrolled through some form of managed care versus a fee for service model. Medicaid interacts with other payers such as private insurance, Medicare workers’ compensation, and the Children’s Health Insurance Program.
When Medicaid benefits supplement another coverage source such as Medicare or private insurance, that’s generally referred to as wrap-around coverage. It gets very complicated. And like most things, Medicaid varies within states. What you should take away from this is in most states, Medicaid is what’s called the payer of last resort, meaning that in terms of federal reimbursement, a state must build another entity providing services to a Medicare beneficiary before submitting a request for reimbursement under Medicaid.
Because Medicaid is such a state-specific program, all states operate their Medicaid program under at least one Medicaid waiver, which allows them to run their unique program. I want to spend a little bit of the time remaining talking through the Medicaid waivers. As I said earlier, most changes to Medicaid were enacted through the budget reconciliation process. The ability of states to waive certain federal requirements was included in the Social Security Act in 1981 as a way for states to test out new policies to improve the program.
Broadly, states have two waiver pathways under Medicaid. Section 1915 of the Social Security Act focuses on program flexibility to allow states to for example, provide home and community-based services as an alternative to institutional care. As you may recall, HCBS are not mandatory under Medicaid. Under these waivers, states can do stuff they can’t do through traditional Medicaid, such as provide services to a targeted population and cap enrollment in costs.
In theory, waivers should be cost neutral. CBO, the Congressional Budget Office does not believe any of these waivers are cost neutral, just FYI. Section 1115 focuses on experimentation and demonstration, allowing states to test out new and innovative approaches to delivering care. Generally, these demonstrations are geared to the entire Medicaid population within a state, but some have been used to focus on specific services or populations such as those with substance abuse disorder or to provide treatment for institutions for mental diseases, also known as IMDs, which have a 16 bed limit.
States have used waivers to control costs through enrollment and eligibility restrictions, premium and cost sharing increases, and expanded use of managed care. That’s Medicaid in under 10 minutes. I hope we have provided you with the basics. I look forward to answering your questions. I’m 30 seconds ahead. I will now turn the time and my remaining time over to Cynthia Cox.
Turning on the mic this time. I’m Cynthia Cox with the Kaiser Family Foundation, also called KFF. In addition to being a chart making factory, we are also a policy analysis, polling and journalism organization. Although we have the name Kaiser, we are not affiliated with Kaiser Permanente. We have no industry affiliations at all. We are just here to provide unbiased, nonpartisan information on health policy issues.
I’m here to provide a 10-minute version of the Affordable Care Act, which might be slightly easier than Medicaid or Medicare. I will start with a timeline in which most of you were alive, I think. You probably remember some of this, although you may not have been working in this space for this whole time. Before the ACA, there was pretty broad frustrations with how the US healthcare system was working.
Although the ACA was passed along party lines, I think the frustrations that existed before the ACA was passed were shared by Republicans and Democrats in terms of especially the affordability and cost issues that still to this day persist in many ways. Before the ACA, some of the things that you may have heard a lot about were that health plans could discriminate against people with pre-existing health conditions.
The rules here varied both by state and by market segment in terms of how people were getting their health insurance through private insurance. You could get it by buying it yourself directly from an insurance company or broker, or you could be getting it through your employer as we heard earlier. Some of these kind of ways in which health plans could discriminate, could happen in some markets, but not others.
For the most part, this kind of consumer protection issues were happening or lack thereof, were happening in the non-group market, which is where people were buying their own insurance. You might hear individual market, these are kind of synonyms here for people buying their own insurance where they don’t get it through work or Medicaid or Medicare. Some of those issues that you’ve probably heard of were that people could be denied coverage if they had a preexisting health condition.
If they got coverage, they might have some carve out or exclusion where their health plan did not cover their preexisting condition, or if it did, they might have been charged a higher premium. There were also broader issues around a lack of out-of-pocket maximums. You might incur any amount of out-of-pocket costs. There were also, for many people lifetime limits on their coverage. This wouldn’t really affect most people.
If you got very, very ill or had some sort of serious condition and you reached, say a million dollars in healthcare spending over the course of your lifetime, then you would get no more benefits at that point. There was, as I mentioned, just broad frustration with how this was playing out, and especially around the cost and affordability aspects. The ACU was passed in 2010 to address many of these consumer issues.
Also, to help bring down the cost of health insurance, particularly for people who are low income by expanding Medicaid and by creating subsidies for people to buy their own health insurance if they qualify for those subsidies. There were also some other big provisions that you may have heard about shortly after the ACA passed in 2010. There were new rules requiring the preventive health services be covered without cost sharing.
You could get a mammogram or colonoscopy without paying a co-payment. Also, there’s something called MLR or medical loss ratio rebates where this was to get at the value of health insurance that if you’re paying your premium every month, you should be able to get something in exchange for that in terms of healthcare benefits. What the MLR rule does is says of all of the premium income that insurers are bringing in, they have to spend at least 80% of that in the individual market on actual healthcare benefits.
For larger employer plans, it would have to be 85%. If they do not reach that threshold, then they have to issue a rebate to consumers. There have been some years where those rebates have been quite large that consumers have received. The biggest changes though to what I was mentioning before around preexisting conditions and these consumer protections and market rules and expansion of Medicaid and creating these new subsidies and new ways for people to buy insurance.
That all started in 2014 with the rollout of what I’m going to focus on mostly here today is the exchange markets. You may have heard the Obamacare markets, the marketplace exchanges, HealthCare.gov, Covered California. These are all kind of the same concept here, where people can go to a single website, see all the plans that are available to them and see if they qualify for a subsidy to purchase that coverage.
Since 2014, there’ve been a lot of ups and downs in these markets. There were times when premiums were rising, and although most people get a subsidy that caps how much they have to pay for their premium, there were still people who did not qualify for subsidies, so there was a lot of media attention on the premiums and how much they were changing in the early years of the exchanges. In 2017, as you probably all know, there were the repeal and replace debates that were happening.
There was a lot of uncertainty about whether the ACO would continue to exist, whether subsidy payments would continue to be made for certain cost sharing subsidies, and also whether the individual mandate would be enforced or repealed because of all of this uncertainty when insurers were setting their premiums for 2018 during the 2017 debates, they ended up I think in hindsight pricing very high because they were concerned about all of this market instability and also because they had been unprofitable and the first few years that the ACA exchanges.
As we’ll see in a little bit, premiums did rise quite a bit then they’ve plateaued now. Also, very importantly, there are new subsidies that were passed with the American Rescue Plan or a RPA and also continued by the Inflation Reduction Act that significantly reduce how much people are paying. I’m going to breeze through these next few slides because these are just kind of reinforcing what I already said. Just to give you a visual.
Of course, as you all know, the ACA significantly reduced the uninsured rates to record lows. Although, I should also mention that there still are many uninsured people who are eligible for ACA coverage either through the Medicaid expansion or the exchange markets, and many cases for free coverage, but they’re not signing up, which we can talk about later. Of course, Medicaid and the exchange markets are the main reasons why they or the main vehicles through which the ACA expanded coverage, enrollment in the ACA marketplaces increased a bit, then plateaued.
Then more recently, just in the last couple of years has really taken off to record highs. Why is that? Well, I mentioned before that there were these premium changes. Most people weren’t paying those premium changes. That’s the orange bar there and what the sticker price the premiums was, the blue bar is what people were actually paying if they were, especially for those receiving a subsidy. You’ll notice in the last couple of years, because of the ARPA and now continued by the Inflation Reduction Act, people are paying a lot less for their health coverage.
In many cases, they’re getting free health coverage on the ACA marketplaces and so that has been a big boost to enrollment. Also, I mentioned earlier there’s this thing called cost sharing subsidies. Basically, that brings down how much you’re deductible or co-payments are if you’re low income and qualify for such a reduction. Although the subsidy payments are no longer being made, long story it has to do with silver loading, you may have heard of this, I can talk about that later.
There’s these reductions in how much people have to spend for their deductible. You’ll notice over on the far side there, that $97 deductible, that’s unheard of for employer plans really. That’s how generous these reductions and cost sharing are. When you lower the premium payments that people have to make, that makes it affordable for them to buy better coverage. In other words, they don’t have to get a bronze plan now, they can get a silver plan that has these cost sharing reductions and they can also lower their out-of-pocket costs too.
There’s other reasons why we’re at record high enrollment. I think that has to do with the longer enrollment period, more investment in consumer kind of outreach marketing in-person assistance. There was also the so-called fixed family glitch, and I also think the pandemic might have motivated some people to keep or get coverage too. Just real quick in 30 seconds, what to look out for.
There’s still of course, a lot of issues with the exchange markets both on the marketplace and employer coverage. There’s still is a lot of people who have very high deductibles, which is leading to medical debt that we think, we’ve estimated that the amount of medical debt people owe in the United States is about the size of Greece’s economy. We also are looking at claims payment issues where a claim might be denied, where there might be prior approval required, and the appeals process is very difficult.
We’ve also estimated that your chance of getting an appeal processed and overturned might be similar to getting struck by lightning. I’m out of time here but also just want to of course end by talking about the cost of all of this, which is that these subsidies do cost billions of dollars. The Inflation Reduction Act subsidies, I think were in the $20 to $25 billion per year range, and they will expire in 2025 if not extended. Also, worth noting that it’s small potatoes compared to some of the other health subsidies that are being delivered through other coverage sources.