By Brian Blase
While Congress debates issues related to the health and economic fallout of the coronavirus epidemic, it also should use this opportunity to enact several broader reforms that would help people now as well as improve families’ ability to obtain better and more affordable health care and coverage in the future.
Congress should consider four positive actions and should avoid acting on two prominent proposals. Specifically, Congress should codify the Trump administration’s price transparency rules, prohibit balance billing, expand health savings accounts (HSAs), and provide states with greater Medicaid flexibility. Congress should not subsidize health insurance through a COBRA continuation subsidy or expanded ACA subsidies and should not provide a state bailout.
Codify Price Transparency Rules
Nearly nine-out-of-ten Americans agree that insurers and hospitals should be required to provide price information in advance of patients receiving health care. Transparent price information will enable patients to be better shoppers of care and will help employers reduce costs and design better benefit plans for their employees.
The Trump administration has finalized a rule that requires hospitals to provide upfront and real prices, including prices for 300 shoppable services in a consumer-friendly format. The administration also has proposed a rule requiring insurers to publicize the amounts they reimburse for health care services. A federal judge recently upheld the hospital price transparency rule, rejecting arguments from hospitals, but there is still legal risk around both rules. Last month, I wrote a piece in Health Affairs that analyzed the arguments and concluded that “Congress should lock in the Trump administration’s price transparency rules to end the legal battles over them and to give the American people the information they need to make smarter decisions about their health care and coverage.”
Prohibit Balance Billing
The Trump administration already has taken prudent action to prohibit hospitals and providers from balance billing patients if they receive money from the coronavirus bailout fund. This means that patients cannot be billed more than the network cost-sharing amounts stipulated in their insurance contracts, even if they received care from an out-of-network provider. Congress should go further and ban balance billing, so patients don’t receive surprise bills after they receive treatment at in-network hospitals or medical facilities. (I explored this subject with my Galen Institute colleague Doug Badger in a December 2019 paper.) The administration reportedly has been advancing a sound policy that would prevent patients from being balance-billed at in-network facilities, leaving the payment rates to be negotiated between insurers, hospitals, and physicians without government rate-setting. Congress should adopt this proposal.Recommended For You
Expand Health Savings Accounts
HSAs produce better engaged consumers seeking value in their health care spending, which in turn puts pressure on providers to reduce prices and improve quality. HSAs allow people to use pre-tax dollars for current care and to grow their health savings tax-free for future care. Unfortunately, only people with a certain type of coverage—a plan with a high deductible that meets several other requirements—can make HSA contributions. Congress should allow everyone, regardless of the design of their insurance, to have an HSA. In the near-term, Congress could help people by allowing anyone to contribute to an HSA during the extent of the coronavirus public health emergency. Texas Sen. Ted Cruz and North Carolina Rep. Ted Budd have introduced important legislation that would do this.
In addition to expanding the ability of people to save their own money in an HSA, Congress should consider contributing funds into HSAs for people with employer coverage who lost that coverage over the past few months. Congress could contribute $1,500 to the HSAs of people with single coverage and $4,000 to the HSAs of people with family coverage in order for them to pick coverage and care that works best for them. Congress should also clarify that people can make HSA contributions if they utilize direct primary care arrangements that eschew middlemen from the doctor-patient relationship.
Provide States Greater Medicaid Flexibility
The Families First Coronavirus Response Act (FFCRA), signed into law in March, provided a 6.2 percentage point increase in the federal reimbursement of state Medicaid expenditures for traditional enrollment categories. This policy disproportionately benefits states with profligate Medicaid programs, and a provision in this law also ties states’ hands in guarding program integrity. Abundant evidence shows that a large number of Medicaid enrollees, particularly in expansion states, are ineligible for the program, but FFCRA prohibits states from taking steps to ensure only eligible enrollees are receiving benefits. This policy is misguided because it forces states, many of which are experiencing severe budget pressures, to pay health care expenses of ineligible enrollees who consume funds and medical resources needed by poorer and more vulnerable recipients. Congress should undo the restrictions placed in FFCRA that prevent states from ensuring Medicaid enrollees meet program requirements.
Avoid Health Insurance Subsidies
While it’s understandable that Congress seeks to help the unemployed, it should do so in ways that don’t discourage work and reopening the economy. Moreover, policies should be aimed at helping the unemployed rather than providing corporate welfare.
In May, the House of Representatives passed legislation that fully subsidizes unemployed workers’ continued participation in their employers’ health plans through COBRA and that expands ACA subsidies. This legislation would direct more than $100 billion to health insurance companies, which are sitting on record profits because of the sharp drop in health care utilization by millions of people who are avoiding medical care.
A COBRA subsidy is problematic for many additional reasons. For one, it makes unemployment less costly for workers and would thus lead to higher jobless rates and longer spells of unemployment. For another, a COBRA subsidy, in contrast to an HSA expansion, would lock the recipient into using the government aid only for COBRA premiums, which means they can’t use the funds in ways that would help them more.
Fortunately, the decline in the number of people with employer health coverage has been much less than projected, so a COBRA subsidy makes even less sense. Based on surveys, nearly 98 percent of people who had employer health coverage in February maintained employer health coverage as of early June. Of the people who lost their jobs and had health coverage at work, more than three times as many people have maintained employer coverage as have enrolled in the ACA exchanges, Medicaid, or become uninsured.
Avoid a State Bailout
Congress should carefully consider whether any additional relief to states and localities is needed given the considerable support already provided, the Federal Reserve’s program to loan money to states and localities, and the desire not to further perpetuate imprudent state fiscal policy. But if Congress feels compelled to provide additional aid to states and localities, it should not be delivered by raising the percentage that the federal government reimburses state Medicaid spending, as the House bill would do. Doing so rewards states that have built the most profligate and wasteful Medicaid programs and encourages states to further divert Medicaid money for non-health purposes.
Any aid to states should be conditioned on structural reforms that promote wise budgeting and improve the federal-state fiscal relationship. Potential reforms include: gradually lowering the ACA’s Medicaid expansion reimbursement rate until it reaches parity with the rate for traditional Medicaid recipients; requiring that Medicaid funds go for health care for the poor; permitting states to review Medicaid eligibility more frequently than once a year; requiring CMS to conduct annual eligibility audits of state Medicaid rolls and to make recoveries of improper state receipt of funds; and eliminating hospital presumptive eligibility. I discussed all these proposals in more depth in Galen Institute research released in May.
As the country struggles with the coronavirus pandemic, the current legislative debate provides Congress an opportunity to both provide immediate relief and to introduce reforms that will improve health care markets over the long run. Congress should help families by expanding price transparency and HSAs and prohibiting balance bills. Congress should help states by allowing them additional flexibilities to control their Medicaid costs. Finally, Congress should avoid wasting taxpayer money on inefficient subsidies for health insurance companies and state bailouts.