December 22, 2017

Political uncertainty brings unpredictability to health care

Kurt Barwis is the CEO of Bristol Hospital.
Frances Padilla, President, Universal Healthcare Foundation of Connecticut
Silas Warner, Vice President/Client Advocate, Willis Towers Watson

Health care is ever shifting and evolving, but 2018 could bring more uncertainty and change than usual for the industry.

With the election of Donald Trump and Republican control of both chambers of Congress, the federal government could — should it be able to pull it off — make some of the most significant changes to the healthcare industry since the creation of Obamacare, or the Affordable Care Act (ACA), nearly a decade ago.

At the same time, state-level activity — ranging from a recent change to hospital taxes to ongoing shifts in health insurance design and payment structures — could be equally important for Connecticut's healthcare industry in the year ahead.

CVS Health's recent proposed $69 billion purchase of Hartford health insurer Aetna also portends major potential changes in health care as insurers, pharmacy benefit managers/retailers and care providers become increasingly connected.

Three healthcare experts — Kurt Barwis, CEO of Bristol Hospital; Frances Padilla, president of the Universal Healthcare Foundation of Connecticut; and Silas Warner, vice president and client advocate at Willis Towers Watson — shared their outlooks and assessments for the coming year.

Here are their top issues to watch in 2018:

1. ACA uncertainty to impact providers, patients

Republicans have spent much of 2017 trying to make good on their years-long pledge to repeal the Affordable Care Act. But even with control of Congress and the presidency, they have so far failed to do so in several high-profile attempts.

It seemed Republicans had given up on healthcare reform to focus on passing a major tax cut, but that's not exactly the case. The GOP Senate and House compromise tax bill includes a provision that would repeal the ACA's individual mandate.

Barwis: We clearly have seen that in Connecticut, the percentage of people who are insured as a result of the ACA is one of the highest in the nation. And as a consequence, it would be a terrible thing if the ACA was repealed.

I do not think it will be repealed. I do have concerns about block grants and other ideas that many feel will transform our state Medicaid and Medicare programs. What's clear as a country is that we need to get our arms around how we lessen the cost trajectory.

Padilla: If we've learned anything in 2017, it is that we are back to the leadership for healthcare transformation falling to the state level. This means it's also important to prevent backwards slippage for Connecticut residents who've enjoyed some sense of security from the coverage available through the ACA.

Several states are looking at what it would mean to allow all residents to buy into their state Medicaid programs. Others are looking at codifying the rules on pre-existing conditions, annual and lifetime maximums, and ensuring that all carriers offer plans that have the essential health benefits codified in the ACA.

Connecticut [like Massachusetts] should codify the individual mandate and strengthen the fines so that there is real incentive to buy insurance, especially among the young and healthy.

2. Provider tax fix could help stabilize hospital finances

The state budget that passed in November could represent a reset in the relationship between the state and its private hospitals.

The budget alters a tax that hospitals have paid to the state since 2011. While it increases the annual tax from $556 million to about $900 million, there are new legal assurances that the additional money would come back to the hospitals via a federal reimbursement. Medicaid rate increases and other changes more than covered the net impact, which helped win the industry's support.

Barwis: The legislature took a tremendous step forward in recognizing and legislating positive changes to the hospital provider tax program in our new biennium state budget. I am truly thankful for their bipartisan recognition and support that reducing and ultimately eliminating the negative and devastating impact of the hospital provider tax program is moving Connecticut in the right direction.

3. Rising employer, consumer costs a concern

Warner: The top trend in employer-sponsored health care continues to be cost management. The cost of health care continues to rise and trends are well above the rate of inflation. Willis Towers Watson's Best Practices in Health Care Survey, which polled employers in Connecticut and around the country, found that large-market employers (1,000-plus employees) expect costs to rise 6 percent in 2018 before plan changes, while middle-market (100-999) employers expect costs to rise 8 percent.

Padilla: In Connecticut, we can anticipate a continued rise in health insurance premiums and prescription drug costs, and consumers will continue to feel the financial consequences of mass consolidation by hospitals, such as the drawn-out contract dispute between Anthem and Hartford HealthCare.

Contract disputes hold Connecticut consumers and patients hostage, forcing many to incur out-of-network charges. Connecticut lawmakers should implement measures to protect consumers from even temporarily losing access to care and potentially going into medical debt when these disputes occur.

4. Shifting payment options, plan designs to continue

The march toward population-based health care (paying providers for keeping patients healthy, rather than on a fee-for-service basis) marches onward. At the same time, employers are working to instill healthy habits in their workforces, in the hopes of keeping rising premiums at bay.

Barwis: Hospitals in Connecticut are diligently focused on shifting from a fee-for-service payment model to a value-based payment system.

We invest in people and resources to make these types of improvements happen every day, yet in doing so, we lose the financial benefit of the revenue we would have received had we done nothing. Capturing value for value creation, doing the right thing, has been elusive at best.

In my opinion, the key to a positive economic forecast for Connecticut hospitals continues to be inseparably tied to the degree to which federal, state and commercial payers support transformational investment and the implementation of payment methodologies necessary to move the industry fully into a value-based world.

Warner: Nearly one quarter of employers nationally are expected to only offer an account based health plan (which pairs a high-deductible offering with a health savings account or health reimbursement arrangement) by 2018, while over 60 percent will offer an ABHP as an option.

Read more forecasts here.

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