1. health and fitness

Vol. 3, No. 4 — January 28, 2015
Exchange Round-Up
9.5M In Exchange Plans, King Briefs Out, Budget On Deck
HHS’ announcement that 9.5 million people are now signed up for exchange coverage — including 7.1 million
through Healthcare.gov — with 87 percent eligible for subsidies comes as stakeholders supporting the ACA are filing
briefs backing the administration’s stance in King v. Burwell. Also, on Wednesday the Senate Finance Committee will
mark up legislation that allows employers to exclude veterans from counting toward their employee numbers for the
employer mandate. The committee will return next Wednesday (Feb. 4) for a hearing on the administration’s HHS
budget request, which will be out Monday (Feb. 2).
continued on page 12
CBO Lowers ACA Net Cost Projections Drop By $101M
The Congressional Budget Office Monday (Jan. 26) lowered its expectations of exchange enrollment from 13
million Americans to 12 million who are projected to buy a health care plan through a state or federal marketplace in
2015. The ACA’s coverage provisions will cost the federal government $76 billion in 2015 and will grow to $145 billion
in 2022 before leveling off, likely due to a policy that will limit the government spending on subsidies as well as
downward pressure from the so-called “Cadillac tax” on high cost plans, CBO says.
That marks a $101 billion, or 7 percent, drop from an April 2014 projection which calculated the net costs by 2024,
CBO says.
continued on page 6
CMS Unveils Number Of Adult Medicaid Enrollees Linked To Expansion
The Medicaid program had about 4.8 million beneficiaries enrolled in the new adult group created by the ACA’s
Medicaid expansion by the end of the first quarter of 2014, out of which 3.2 million (or two-thirds) were “newly
eligible,” and another 1.5 million were not, according to numbers released by CMS on Friday (Jan. 23). This is the first
time CMS has broken out that data since the Medicaid expansion went into effect; departing CMS Administrator
Marilyn Tavenner told Congress members in December that the information could be out within a month.
The data is a state-reported account of unduplicated individuals enrolled at any time during each month of the
quarterly reporting period, and includes the break-out of the newly eligible adults only in states that adopted the
continued on page 8
Congress Likely To Act On Short-Term Patch For ACA If Subsidies Ruled Illegal
The GOP-led Congress would likely act on a short-term legislative fix to the health care law that would allow
federal subsidies to continue flowing through the federal exchanges up to a set date, albeit in exchange for certain
concessions from Democrats in the event that the Supreme Court rules against the administration in King v. Burwell,
several sources are suggesting.
On Friday, both Joe Antos, health care scholar at the conservative American Enterprise Institute, and Judy Feder, a
former Clinton staffer and public policy professor at Georgetown University, agreed that the government has to find
some type of “workaround” if the administration loses in King v. Burwell, for which oral arguments are set to begin
continued on next page
IN THIS ISSUE . . .
More Than 100 Lawsuits Have Threatened To Reshape ACA ............................................................ p4
HHS: 9.5M Now Enrolled Via State, Federal Insurance Exchanges ................................................... p5
Counihan: CMS Eying Ways To Avoid Overwhelming Consumers With QHPs ............................. p11
CMS Says OIG Study Spurred Changes To Exchange Contracting ................................................ p15
March 4. And on Monday, Sen. John Barrasso (R-WY) said an interview with the Washington Examiner that if the
Supreme Court rules against the subsidies, “Obama would likely push Republicans to pass a simple technical ‘fix’ that
would change the language of the statute to allow for subsidies to be used toward purchasing coverage on the federal
exchange.” Barrasso said he doesn’t see a permanent measure passing but suggested a temporary fix was possible if the
president made some concessions.
Republicans are likely to demand that Obama agree on changes to the law that would end the individual mandate and
other provisions widely disliked by the GOP in exchange for a “temporary restoration of the subsidies,” Barrasso told the
Examiner.
“‘This president is going to try to force Republicans to pass a one-page fix that says, make all that he has done
illegal, and make it legal with a one-page bill,’” Barrasso said. “‘I don’t see Republicans doing that. I think if he does
want to continue subsidies for some period of time — which will be a limited period of time — that he’s going to have to
agree to make some significant, what he would consider concessions, that I would consider differently. I’d consider as
removing more damaging parts of the healthcare law. And that would be eliminating the mandates, giving more freedom
and flexibility to those 37 states who haven’t set up their own exchanges.’”
Multiple bills aiming to change parts of the ACA are already filed, and Barrasso said he is working on transitional legislation with Senate committees, the Republican Policy Committee and House Ways and Means Chairman Rep.
Paul Ryan (R-WI).
“‘I think between now and the time the Court rules, we need to show the American people that we want to limit the
damage done by the healthcare law and prevent future damage,’” Barrasso told the Examiner. “‘There are a number of
people who have gotten subsidies. We want to make sure that there is a transition for them as we try to transition the
entire healthcare law to a more free market system.’”
According to a recent Urban Institute study, about 8.2 million people would become uninsured if the Supreme Court
rules against the administration. The majority if those impacted would be white, working full or part-time and living in
the South, according to the report.
Feder said she doesn’t see a major negotiation on the horizon. “They can’t trade away a lot. They have to be looking
at a workaround,” she said, adding that a short-term legislative fix may be best to keep fighting another day.
“I’m rooting for a surprisingly good thing,” Feder said of the lawsuit. “It seems to me it’s a freaking disaster … if you
don’t have the subsidy leg, then the rest comes apart.”
Joe Antos suggested that if the subsidies are pulled, perhaps a deal could be struck in which “states that didn’t
want to do this could be exempted from all the ACA rules and requirements, but they still would get the responsibility
of dealing with people losing insurance. “They just have to do it their way. Truly localized, exactly the same objectives
down to the state level. … That would be very interesting for Republicans,” Antos said.
Local officials are going to pressure their congressional representatives for a solution because they don’t want to be
saddled with fixing the health care system post-King, Antos said.
Barrasso believes President Obama would try to bully governors in states that use the federal exchange to set up their
own state marketplaces, or redefine state exchanges to say that all marketplaces qualify to give subsidies.
Though Antos and Feder agreed that the health care system is still a long way from providing affordable access to
meaningful care for everyone, they were less harmonious on ACA implementation thus far.
“I have been astounded at how successful the Affordable Care Act has been,” Feder said. Covering about 10 million
people, with premiums rising slower than anticipated and a slower rise of health care costs is a major accomplishment,
she added.
Antos is less impressed with enrollment, pointing out that 7.1 million people is around the total number of consumers
who signed up for coverage through the exchanges in 2014. How many are newly insured because of the law is hard to
know, he said, and the ACA needs changes to be more efficient.
What last year’s open enrollment period showed is that people who really wanted insurance were willing to jump
through hoops to get it, he said.
Antos believes health care officials need to more effectively target Americans who need the most help, saying that the
government is oversubsidizing those who need less and undersubsidizing those who need more. ACA subsidies are “not
particularly generous,” Feder agreed, creating a significant problem for participation.
Antos said the employer mandate is the most pressing problem in the ACA and he backs the 40-hour workweek bills in both congressional chambers.
Feder argued that while it is bad that some workers’ hours are being cut to comply with the employer mandate,
evidence shows that is not happening on a large scale. “This line was drawn at 30 hours to avoid affecting a lot of
people,” she said of the point at which employers must start providing insurance under the ACA. “You raise it to 40 hours
and you’re potentially affecting most workers.
Antos contends that those lower-wage workers who tend to work fewer hours would be better off in the exchanges
than receiving employer-based insurance. Even those who originally supported the mandate agree it isn’t doing what they
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
intended, he added.
“This was a pure Washington political ploy,” he said. “The fact is, large employers are not going to get out of the
business of offering insurance to employees” — and small businesses have a hard enough time staying open without extra
regulations.
When asked if it is now too late to repeal the ACA, Antos replied that “it’s never too late to take a vote on anything.”
The system doesn’t have to be run by the government, he said. It should instead put the impetus for change in the hands
of providers, hospitals and other stakeholders to improve delivery and payment systems.
“Yes, it’s the current law of the land, but the question is, ‘What is the it?’” Antos said. “It will be changing. I think the
next president will be making a lot of changes. The general outlines are going to be there and I think Republican leadership has already said a lot of things they wouldn’t touch anymore.” — Rachel S. Karas
ACA Supporters Prepare To File Amicus Briefs In King V. Burwell Lawsuit
Around two dozen amicus briefs will be filed Wednesday (Jan. 28) in support of the Obama administration, including
those from about four times as many states who say subsidies given through the federal exchange should be legal as those
who wrote briefs to oppose federal subsidies, according to Families USA executive director Ron Pollack.
Already, the American Cancer Society and several other advocacy groups joined in on a brief that points out if
Congress had based the availability of subsidies on the creation of a state-based exchange, they would have strongly
objected to the law. “Our organizations would have strenuously objected to any suggestion that the physical and financial
health of patients with serious diseases should depend on the entity administering the exchange in their state. We would
have objected even more strongly to any legislative provision that used patients’ well-being as a bargaining chip to induce
states to establish their own exchanges,” says the brief filed by ACS, the American Cancer Society Cancer Action
Network, American Diabetes Association, American Heart Association and National Multiple Sclerosis Society.
Pollack told Inside Health Policy Tuesday (Jan. 27) that their brief contends that the law intended to provide subsidies in every state, irrespective of if a state offers health insurance through a state-based exchange or through the federal
government. Families USA will hold a press conference Wednesday morning in support of retaining the premium subsidies, with Rep. Sander Levin (D-MI), ranking member of the House Ways and Means Committee; Sister Carol Keehan,
President and CEO of the Catholic Health Association; and three consumers who say their lives are at risk if subsidies are
withdrawn.
Pollack said that while Congress gave states the option of creating their own exchanges, the law never said that doing
so was a condition for the subsidies as the King plaintiffs claim. That’s a “pretty significant allegation about conditionality” since “you have to communicate it to the people making the decisions,” he said.
No state officials ever received any notice that failing to create their own exchange would disqualify them from
receiving subsidies, because the people who wrote the law did not mean it to be so exclusive, Pollack said.
He added that the consumer advocates’ brief in King v. Burwell is a stronger argument than their amicus brief filed in
Halbig v. Burwell, when they wrote more generally about the purpose of the statute than specific provisions of the law.
Whereas Pollack believes friend-of-court briefs filed on behalf of the plaintiff are driven solely by an ideological
desire to undermine the ACA, Families USA’s brief will be filed for consumers who will be negatively affected if they
lose their federal subsidies.
He said their friend-of-court briefs will have a significant impact on the Supreme Court justices because they are
filed by those whom the decision would affect and by committee chairs who oversaw the writing of the ACA. They
unambiguously meant to provide subsidies in all states, not only through exchanges established by states as the law’s text
states, Pollack said.
Oral argument in King v. Burwell are scheduled to begin March 4. Wednesday is the deadline for amicus briefs to be
filed in support of the defendants. Twenty-one briefs supporting the plaintiffs were filed by Dec. 29. — Rachel S. Karas
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More Than 100 Lawsuits Have Threatened To Reshape ACA
Since the Affordable Care Act’s passage, opponents have turned to the court system to challenge the legality of its
mandates, clauses, subsidies and effects on congressional authority, with many lawsuits pending in addition to the highprofile Supreme Court suit on whether subsidies are available in federally facilitated exchanges. A recent report by Ann
Purvis, a senior research fellow at the National Center for Policy Analysis, details the numerous lawsuits that could
change the face of the ACA without Congress even having to step in.
“From the reach of congressional power to the scope of religious freedom, litigation over the Affordable Care Act has
spanned judicial doctrines, with plaintiffs of all stripes — nuns, small businessmen, states and corporations — challenging the law’s many mandates and requirements that make it one of the most intrusive and far-reaching pieces of legislation
in American history,” Purvis wrote. “But the many lawsuits surrounding the Affordable Care Act are a reflection not only
of the law’s complexity and controversy but also of the unprecedented amount of executive action surrounding the
legislation. Some of these lawsuits are as much about executive overreach and the rule of law as they are about
substance.”
The ACA has been amended via executive fiat 24 times, Purvis continues, from delaying the requirement that
employers provide employees with health insurance to allowing insurers to re-offer the plans the law required them to
cancel. In her view: “The administration has blatantly ignored the text of the legislation when necessary.”
Here’s a rundown of parts of Obama’s signature achievement that have been reviewed by the courts or are currently
in jeopardy, per Purvis’ report:
• Individual mandate: The U.S. Supreme Court in 2012 upheld an ACA provision that American citizens must
purchase health plans with specific features required by law. In National Federation of Independent Business v. Sebelius,
the court found that the penalty for failing to buy an insurance plan was better classified as a tax, and fell under the
federal government’s power to tax and spend. SCOTUS also ruled that expanding Medicaid under the ACA was unconstitutional coercion of the states, therefore making such expansion optional.
• Employer mandate: Hotze v. Sebelius, currently in the U.S. Fifth Circuit Court of Appeals, alleges that the
employer mandate violates the Fifth Amendment’s clause that prohibits taking private property for public use without just
compensation. “Hotze argues the mandate requires employers, under threat of penalty, to purchase ACA-compliant
insurance, transferring their wealth (private property) to private insurance companies and the many individuals, such as
those with preexisting conditions, whose costs are subsidized by others’ premium payments,” Purvis writes.
• Contraceptive mandate: Employers’ opposition to the requirement that they provide their workers with insurance
that covers contraceptives have resulted in some of the most high-profile cases before the courts — including Burwell v.
Hobby Lobby Stores, Inc., which held that the government was violating religious freedom by asking groups to go against
their pro-life beliefs. The administration later exempted houses of worship from the mandate entirely and allowed certain
religiously affiliated organizations to place the burden of contraceptive coverage on their insurers. SCOTUS ruled in the
June 2014 Hobby Lobby decision that the government cannot require closely-held corporations with religious objections
to provide contraceptives. That August, Obama administration also proposed rules to allow such corporations to apply for
a religious accommodation.
• Religious accommodation: That accommodation, however, is making its own waves in 29 lawsuits. Little Sisters
of the Poor v. Burwell claims that by signing the form to shift the cost of covering birth control to their insurers, the
Catholic organizations are complicit in instructing a third party to provide the objectionable contraceptives — and
therefore are still acting against their religious beliefs. The Little Sisters case is currently being heard in the Tenth Circuit
Court of Appeals, while the similar Wheaton College v. Burwell is before the Seventh Circuit Court of Appeals. Both
earned a SCOTUS injunction exempting them from the birth control mandate while their cases are pending.
• Federal exchange subsidies: Perhaps the most threatening cases are those that challenge the IRS decision to
unilaterally grant subsidies to qualifying enrollees in the federal marketplace. The law states that tax credits are available
to people who sign up in a health exchange “established by the State.” While the administration says that was a drafting
error, Purvis says the law was written that way to create an incentive for states to create their own marketplaces. But since
only 14 states started local exchanges, lawsuits like King v. Burwell and Halbig v. Burwell contend that subsidies given to
the 36 other states that use the FFM are invalid based on the plain text of the law. Oral arguments in King v. Burwell are
scheduled for March 4. A decision is expected this summer, leaving nearly 10 million people who receive those federal
subsidies hanging in the balance. Economic modeling found that more than 99 percent of Americans who qualify for
subsidies would not be able to afford health insurance without them. Further consequences for employers are also
pending, since employers would not be penalized for failing to offer coverage if none of their employees receive
subsidies.
• Origination clause: Sissel v. U.S. Department of Health and Human Services challenges Obamacare on the basis
that revenue-raising measures came from the Senate, not the House as required by the Constitution. SCOTUS ruled in
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
NFIB v. Sebelius, that the individual mandate was valid because it was a tax, and therefore generating revenue. Though
the D.C. Circuit Court of Appeals struck down Sissel’s case, the plaintiff filed a petition in October for a rehearing with
the full court. Hotze v. Sebelius, the case against the employer mandate, also challenges this alleged violation of the
Constitution’s origination clause.
• Independent Payment Advisory Board: Coons v. Lew argues that the creation of an Independent Payment
Advisory Board, which makes Medicare budgetary recommendations, is an “unconstitutional delegation of congressional authority.” The case was dismissed in September before being appealed to SCOTUS. Opponents dislike IPAB
because its recommendations would become law unless Congress and the president agree to an alternative or the
Senate gets a three-fifths majority to override the suggestions. IPAB’s cost-cutting authority, however, has not yet
been invoked.
• Legislative authority: The House of Representatives is also suing over what its sees as an attack on its power to
make law, after the administration delayed the employer mandate and allegedly expended $4 billion in offset payments to
insurers without congressional appropriations. On Monday (Jan. 26), the Justice Department asked the U.S. District Court
for D.C. to throw out the House’s lawsuit because they haven’t proven that they have been hurt by the administrative
changes and can’t move forward with the suit. The DOJ lawyers also allege that “a House of Congress may not - as it
seeks to do here - [file suit] against the executive branch concerning its implementation of a statute.”
The report offers a brief overview of the slew of cases — more than 100 by some counts, Purvis said — that the
administration has and continues to field regarding the ACA.
“How the courts — and primarily, the Supreme Court — ultimately address the administration’s unilateral rewriting
of the law will greatly influence executive and agency power, not to mention the public’s perception and understanding of
laws and lawlessness,” Purvis says in the report. — Rachel S. Karas
HHS: 9.5M Now Enrolled Via State, Federal Insurance Exchanges
HHS announced Tuesday that 9.5 million consumers chose or were automatically re-enrolled in health insurance
plans through state and federal marketplaces in the first two months of 2015 open enrollment, including more than 7.1
million in states using Healthcare.gov and 2.4 million in states with their own exchange platforms.
The department also announced that 2.5 million young adults under age 35 have signed up for coverage as several
stakeholders group are preparing to target that population in the coming days.
In response to the announcement, Avalere Health says “it seems safe to say that exchange enrollees will hit the
Administration’s goal of 9.1 million paid enrollees by the end of 2015 open enrollment; however, enrollment is likely to
fall short of the Congressional Budget Office’s latest prediction of 12 million enrollees.”
The data included in HHS’ second detailed enrollment report runs through Jan. 16 for the 37 states using
Healthcare.gov or partnership exchanges, and through Jan. 17 for 12 states and the District of Columbia, which use
locally run marketplaces. California’s data runs through Jan. 18. The report does not include effectuated enrollment.
Of those who chose a plan through Healthcare.gov, HHS said in a press release:
• 87 percent selected a plan with financial assistance.
• 35 percent or 2.5 million were under 35 years of age.
• 58 percent (4.16 million) reenrolled in a marketplace plan.
• 42 percent (3 million) selected a plan for the first time.
Of those enrolled in plans through state-based exchanges:
• Around 300,000 exchange plan selections are in the four states reporting data on new consumers and consumers
actively reenrolling in marketplace coverage — Hawaii, Idaho, Maryland and Massachusetts.
• Nearly 2.1 million marketplace plan selections are in the 10 states reporting data on new enrollees, consumers
actively reenrolling in marketplace coverage and automatic reenrollees — California, Colorado, Connecticut, District of
Columbia, Kentucky, Minnesota, New York, Rhode Island, Vermont, and Washington.
• California and Florida have had the highest plan selections to date at 1.2 million and nearly 1.3 million, respectively.
Massachusetts extended its payment deadline for coverage beginning Feb. 1 to Jan. 30 because of the recent
winter storm. The state’s Health Connector reported nearly 407,000 total eligibility determinations by Jan. 25,
including more than 88,000 who qualified for QHPs and more than 206,000 who qualified for its MassHealth
Medicaid program.
Oregon’s Insurance Division reported Jan. 23 that nearly 176,000 residents had enrolled in plans from Nov. 15
through Jan. 18, more than half of whom found a plan outside of Healthcare.gov. Around 90,000 people chose an offexchange plan, while nearly 86,000 found a plan on the exchange.
Kentucky’s kynect exchange also said Jan. 23 that nearly 93,000 new or renewed private plan enrollments came
Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
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through the state exchange in the 2015 open enrollment period. More than 38,000 residents enrolled in Medicaid as of
Jan. 22.
Minnesota passed the 100,000 mark with 100,754 enrolled in health insurance through MNsure as of Jan. 20. Nearly
44,000 residents are enrolled in a QHP, more than 16,000 in Medicaid through MinnesotaCare and 40,441 in Medical
Assistance. The state exchange reached the same point a full month later during 2014 open enrollment, though the sign-up
period started six weeks earlier than it did for 2015.
More than 185,000 Marylanders enrolled through the state’s Health Connection exchange as of Jan. 22, including
nearly 94,000 in private QHPs and more than 91,000 in Medicaid.
In Rhode Island, HealthSource RI had enrolled 7,660 new customers in a plan by Jan. 17, nearly 5,700 of whom
had paid their first month’s premium. More than 21,000 customers renewed their coverage, and 18,460 paid for that
renewal. The state has enrolled a total of nearly 29,000 residents this year, more than 24,000 of whom effectuated
their plan.
Vermont Health Connect officials said that as of Jan. 19, more than 9,000 people had “checked out” a 2015 plan,
meaning that they must still make their first premium payment and have their selection processed before their plan is
activated. While 3,791 people have chosen a QHP, 2,506 completed the enrollment process. Only about 200 of the 5,663
people who signed up for Medicaid still need to finalize their enrollment. — Rachel S. Karas
CBO Lowers Exchange Costs, Enrollment Projections . . . begins on page one
CBO also for the first time broke its enrollment projections into subsidized and unsubsidized numbers, possibly due
to the King v. Burwell U.S. Supreme Court case that will rule on whether the Treasury Department can offer tax credits to
qualifying low-income customers who buy health insurance through the federal exchange. CBO believes that of the 12
million consumers, three-quarters, or 9 million, will have the subsidies.
CBO says it reduced its enrollment estimates because attrition from on-exchange plans during calendar 2014
was greater than the administration had anticipated, and because enrollment between Nov. 15 and Dec. 15 was also
lower than expected. Although, enrollment had peaked in 2014 when CMS reported 8 million people had selected
plans, only about 6 million, on average, were covered through the exchanges over the course of the calendar year,
CBO said.
HHS this week said that 7.1 million people had selected a plan through Healthcare.gov as of Jan. 16. Officials expect
to see an enrollment surge before the final deadline of open enrollment on Feb. 15.
CBO also projects average annual enrollment of 21 million people in 2016 and 24 million to 25 million people each
year through 2024. Around three-quarters of those enrollees are expected to receive insurance subsidies, the report said.
CBO also lowered the cost projections for the insurance coverage provisions.
Changes that contributed to the $101 billion reduction include a $68 billion drop in the net cost of exchange subsidies and related spending and revenues; a $59 billion increase in federal spending for Medicaid and CHIP; and a $97
billion net increase in revenues due to expected changes in employer-based coverage.
Subsidies in the exchanges are expected to average around $5,000 per recipient from 2016 to 2018 and could reach
almost $8,000 in 2025.
The net costs of the coverage provisions are expected to grow from $76b billion in 2015 to $145 billion in 2022, at
which point the costs are expected to level off.
CBO attributes the projected leveling off to two policies: the indexing of the ACA subsidies and the excise tax
on the high-cost plans — or the Cadillac tax. “The ACA specifies that if total exchange subsidies exceed a certain
threshold in any year after 2017—a condition that CBO and JCT expect may be satisfied in some years—people will be
required to pay a larger share of premiums in the following year than would otherwise be the case thus restraining the
amount that the federal government pays in subsidies,” the outlook says.
“In addition, CBO and JCT expect that premiums for health insurance will tend to increase more rapidly than the
threshold for determining liability for the high-premium excise tax, so the tax will affect an increasing share of coverage
offered through employers and thus generate rising revenues,” the report adds.
CBO found that the annual number of uninsured Americans will drop from 36 million non-elderly individuals in
2015 to between 29 million and 31 million non-elderly people by 2025. Without passage of the ACA, 24 million to 27
million more individuals would have been uninsured in that time period.
Under current law, exchange subsidies and related spending and revenues will total a net cost of $32 billion in fiscal
2015. The estimate is preliminary because the average number of who will be subsidized this fiscal year is still unknown,
as are demographics and income data for those who were subsidized last year.
CBO and JCT expect to revise estimates of premiums in the baseline projections this spring. They anticipate lowering the
projected average costs of premiums and the federal costs of exchange subsidies from 2016 to 2025. The current estimate
for the second-cheapest silver plan is around $4,000 in calendar 2015. — Rachel S. Karas
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
CMS Reviewing Privacy Policies, Adds Encryption Layer To Healthcare.gov
CMS has launched a review of its privacy policies, contracts for third-party tools and website construction following
concerns raised after the Associated Press reported that Healthcare.gov has been sharing consumer information with
advertising and analytic firms. The agency also added an extra layer of encryption to the “window shopping” portion of
Healthcare.gov to help prevent third parties from viewing consumer data, Marketplace CEO Kevin Counihan wrote in a
Saturday blog post. The AP reported the change on Friday.
Counihan’s post acknowledged that CMS had contracted for “third-party tools” to help improve the consumer
experience by doing things such as seeing when consumers are having difficulty or understanding when website traffic is
building during busy periods. “To do this well, we have contracts with companies that help us to connect interested
consumers to Healthcare.gov and continuously measure and improve site performance and our outreach efforts,”
Counihan writes.
The blog says CMS took seriously the questions the AP story raised about the contracts, which is why the agency
“immediately launched a review of our privacy policies, contracts for third-party tools and URL construction.”
“We are looking at whether there are additional steps we should take to improve our efforts. While this process is
ongoing, we have taken action that we believe helps further increase consumer privacy,” the blog adds.
The action the agency took was to add another layer of encryption meant to reduce the information available to third
parties from the URLs.
Counihan explained that information consumers had put into the “window shopping tool,” such as age, income, zip
code, smoking and pregnancy status, had previously been included in the URL created when a person got their application
results. “This URL is now encrypted and helps prevent third parties from viewing the data the consumer entered,” he said.
Last week, the AP reported that Healthcare.gov was sending information to companies that specialize in advertising
and analyzing Internet data. While the scope of the data being sent was not clear at the time, the AP wrote that it could
contain age, income, zip code as well as smoking or pregnancy status.
Senate Finance Committee Chair Orrin Hatch (R-UT) and Charles Grassley (R-IA) responded to the story by
asking CMS Administrator Marilyn Tavenner if any personal information was being shared with third parties, and if so
what type of information and to whom. The senators also asked Tavenner if CMS conducted audits to ensure no personally identifiable information was shared or used inappropriately.
CMS responded to the story by stressing that consumer privacy is a top priority and pointed out that HealthCare.gov
uses some of the same tools as private-sector websites to help effectively respond to system errors and to improve website
performance.
Vendors are prohibited from using any of the information for other business purposes, CMS pointed out. — Amy Lotven
White House Says Text, Structure And History Of ACA Support King Stance
The Affordable Care Act’s individual mandate and insurance market reforms make it clear that Congress intended for
federal subsidies to be available to those buying insurance in both federal and state exchanges, and it would have been
absurd for Congress to limit the subsidies to those enrolled through state-run exchanges as argued by the plaintiffs in King
V. Burwell, the White House says in its 154-page response to the high-profile case under review by the Supreme Court.
The White House also argues that the employer mandate would not be scuttled were the court to side with the plaintiffs.
At issue is whether the Treasury Department overstepped its authority in saying that the tax credits can flow through
all exchanges, even those established by the federal government, even though the language in the ACA specifically refers
to an “exchange established by a State.”
The administration’s brief, filed Jan. 21, argues that the 4th Circuit Court of Appeals, which had ruled in favor of the
administration, “correctly held that the Afford-able Care Act authorizes Treasury to make premium tax credits available
on an equal basis to Americans in every State, as one would expect in a statute designed to provide ‘Affordable Coverage
Choices for All Americans,’ (emphasis included).” “Petitioners’ contrary rendering of the Act— which rests on an
acontextual misreading of a single phrase in two subclauses...and an implausible account of the Act’s design and history— would thwart the Act’s core reforms in the 34 States that exercised their statutory prerogative to allow HHS to
establish Exchanges for them,” the administration states
“Those States would face the very death spirals the Act was structured to avoid, and insurance coverage for millions
of their residents would be extinguished,” the brief adds, referring to the plaintiffs’ argument the subsidies should only be
available to those in state-run exchanges.
The administration argues that the text, structure and history of the law provide that the credits were meant
to be available in all exchanges. For example, the administration says that several provisions of the law, such as the
requirement for the federal exchange to report to the IRS, would make no sense if there were no credits being
administered. “Most strikingly,” the administration writes, “the Act defines a “qualified individual” eligible to shop on an
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7
Exchange as a person who ‘resides in the State that established the Exchange.’ “
“Accordingly, if a federally-facilitated Exchange were not ‘established by the State,’ it would literally have no
customers. Petitioners’ reading of that phrase cannot be reconciled with this provision or with many others,” the brief states.
The administration also contends that the structure of the law relies on the credits to maintain an affordable insurance market. The legislative history shows that Congress always intended the credits to flow to all Americans regardless
of who established the exchange, the administration says.
For those reasons, the administration says, “the ACA clearly makes federal tax credits available through the Exchanges in every State.”
“But even if there were some ambiguity on that question, it would be resolved by Treasury’s authoritative
interpretation. That interpretation was adopted in notice-and-comment rule-making conducted pursuant to an express
delegation of authority to implement (the tax credits). It is thus entitled to the full measure of Chevron deference,” the
brief adds.
The administration also speaks to the argument that, if the plaintiffs win, the employer mandate would disappear for
employers in FFM states because the penalty is only triggered if an employee seeks subsidies through an exchange. The
administration takes issue with that argument, saying the mandate wouldn’t cease to apply because employers in states
that did not establish an exchange could face the tax if they hired only a single worker in a neighboring state that did.
“Thus, within a single State, some employers would be subject to the tax while others would not, depending wholly
on the fortuity of whether they hired across state lines,” the brief says. “Petitioners identify no reason why Congress
would have provided for such bizarre application of (the mandate),” the brief adds.
Amicus briefs in support of the administration are set to be filed on Jan. 28, and ACA advocates, including Families
USA, will hold a press conference with consumers at risk of losing subsidies.
Oral arguments in the case are set for March 4. — Amy Lotven
3.2M Newly Eligible Adults On Medicaid In Q1 2014. . . begins on page one
Medicaid expansion, CMS says. Under the expansion, the federal government will pay 100 percent of the costs for states
to cover all residents, including adults, earning up to 138 percent of the poverty level until 2016 after which the federal
government will kick in about 90 percent. The report includes numbers from January, February and March 2014 that were
reported to CMS by states in April 2014.
The data show that in that January there were about 3.9 million adult enrollees, out of which 2.5 million (or
about 65 percent) were “newly eligible,” meaning that the federal government will be responsible for 100 percent of
their claims. The remaining 1.4 million were not newly eligible. In February, there were more than 4.2 million enrollees in
the adult group, out of which about 2.8 million were newly eligible and 1.5 million were not.
The data show that some states had far more newly eligible enrollees and others had the opposite. New York, for
example, had 876,019 individuals in the new adult group as of March, out of which only 70,141 were in the newly
eligible category. In Colorado, however, 187,838 of the 212,502 adult group enrollees were newly eligible.
In total there were 54 million Medicaid enrollees by the end of March 2014, including new enrollees.
Dee Mahan, Medicaid program director for Families USA, says that her group is happy to see that nearly 5 million
people, many who had previously had no other options, have gotten coverage due to the expansion. She says that the
numbers of people who had been eligible but not enrolled in coverage prior to the ACA shows how the news surrounding
the enrollment provides a real opportunity for more people to learn that coverage is available.
Still, she says, the data show that there are still a lot of people who could be helped by the expansion and it’s
unfortunate that not every state has taken advantage of the ACA’s provision.
Mahan said Families also plans to use the new data to identify gaps and successes in state outreach efforts. Staff
plans to compare CMS’ enrollment data to information Families has on eligible enrollees in each state to see if any states
may be lagging in outreach and leaving people behind. Conversely, Families hopes to pinpoint states that have been the
most successful with enrollment to find out what they’ve been doing right, she said.
The data do not include California, North Dakota or the District of Columbia where officials are still working to
validate the numbers. The data do also not include information on the “spillover effect” of increased expansion in other
eligibility groups that is happening due to the simplifications of the application process, CMS says.
“The Affordable Care Act will continue to provide accessible, affordable, quality health care for millions of Americans, in part through the expansion of the Medicaid program. As part of our commitment to transparency, we are releasing
enrollment data as of March 2014 on individuals who gained health coverage under the new Medicaid eligibility category,” CMS said in a statement on the report.
The agency notes that the data may not perfectly align with other sources of enrollment data, but will still help to
provide a complete picture of the impact of the Medicaid expansion. The data complements a recent CMS report showing
that 9.7 million additional Americans were covered under Medicaid and CHIP in October 2014 as compared to a preACA baseline, CMS says. — Amy Lotven
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
CHIP Advocates Aim To Extend CHIP Funding By March
Children’s advocate Bruce Lesley said Friday (Jan. 23) that he and his colleagues will be pushing Congress to pass
by March legislation that would extend funding for the Children’s Health Insurance Program (CHIP) for four years, or
through 2019. Lawmakers could then have a complete debate about CHIP along with the maintenance-of-effort provisions for Medicaid and CHIP that also expire in 2019, Lesley, president of the children’s advocacy organization First
Focus, said during a panel at Families USA’s annual conference.
He hopes to see extensions passed as early as the end of March. “We’re trying to get both those things extended as
soon as possible in this first quarter,” Lesley said of CHIP and related provisions. “There’s some urgency around this,” he
said. The ACA reauthorized CHIP through 2019, but only funded the program through 2015 at which point Congress
believed beneficiaries could be moved into qualified health plans (QHPs).
Lesley said that it might one day be possible to move more children into Affordable Care Act coverage, but only once
the law is older and its politics less contentious. He added that moving children into the ACA now would cause their cost
of care to rise and benefits to drop because CHIP is set up to help lower-income families more than those in exchange plans.
“We would love to see the ACA extended in a way and improved so that CHIP kids would not be worse off than they
might have been,” he said. “Congress is still trying to repeal Obamacare … They’re not going to go back and try to make
improvements to it yet.”
Governors and CHIP directors are supportive of the program, Lesley said, which provides low-cost health coverage
for children in families that earn too much money to qualify for Medicaid. CHIP also covers parents and pregnant women
in some states. Both sides of the aisle are supportive of CHIP: Last week, Sen. Orrin Hatch (R-Utah) called extending
CHIP funding before it ends Sept. 31 a priority, and Lesley said even Republican Kansas Gov. Sam Brownback has
spoken in favor of a five-year extension. Sen. Sherrod Brown (D-OH) told the conference later that day that funding
CHIP is smart public policy and crucial to health equity.
Many stakeholders worried that GOP members who oppose Obamacare would try to nix other health programs too, spelling the end for CHIP, but Lesley said they found that isn’t the case.
Lesley also said advocates should fight for more states to tap into resources from the Legal Immigrant Children’s
Health Improvement Act (ICHIA), legislation included in the 2009 CHIP reauthorization that gives states the optional
ability to enroll legal immigrant children and pregnant women in Medicaid and CHIP instead of requiring them to legally
reside in the U.S. for five years before they can receive major federal public benefits.
Lesley said the program is well-received on a local level, but that not all states are signed on because of little awareness.
Many of members of Congress were not around for the reauthorization of CHIP or passage of the Affordable Care
Act, Lesley said. He added that advocates need to educate members of Congress on who the program covers and its
success. “I think it’s the very simple message of ‘Let’s pass it.’”
A 2012 Public Opinion Strategies Poll found that 67 percent of those who answered disapproved of cutting CHIP,
while 73 percent disapproved of cutting Medicaid, Lesley said.
He and Mike Perry, panel member and partner at the research and communication firm PerryUndem, agreed that their
biggest threat is lack of information as those who don’t know what the programs do are more likely to oppose them.
Distrust in government and unhappiness with the ACA — which makes all health care programs a punching bag — also
fuel a dislike of Medicaid, Perry said, so successful Medicaid expansion efforts need to focus on educating the public.
Most people in non-expansion states do not know about federal funding to grow Medicaid or their governor’s stance
on the issue, and many assume that the eligibility levels are higher, Perry said.
Advocates hope giving correct information to residents in non-expansion states can convince them to pressure
leaders to sign onto the program. — Rachel S. Karas
CMS Sets QHP Conference For Late February
CMS will hold a two-day conference for Qualified health plan (QHP) issuers seeking to certification or re-certification to participate in the federal exchanges the agency announced Thursday. The Annual Health Plan Certification
Conference will take place in Baltimore Feb. 23-24.
Issues to be discussed at the conference include: the certification process, rate review, market-wide reforms, essential
health benefits, actuarial value and cost-sharing reduction calculations.
CMS outlined the timeline for the certification process in a December draft letter. The agency proposed that the
issuers submit QHP applications starting March 16 through April 15. Issuers in their Jan. 12 response urged CMS to push
back the date, saying that more time was needed to design plans and develop accurate rates. America’s Health Insurance
Plans (AHIP) suggested a window of May 1 through June 1, while Blue Cross Blue Shield said applications should be
submitted at least through May 15.
Insurers also urged CMS to finalize other guidance related to plan design - including the final 2016 actuarial value
calculator and methodology as soon as possible. CMS posted the final AV calculator and other materials on Jan. 16.
— Amy Lotven
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Toomey To Helm Finance Health Panel, Stabenow Is Top Democrat
The Senate Finance Committee on Thursday (Jan. 22) selected GOP Pennsylvania Sen. Pat Toomey to chair the
health subcommittee and Sen. Debbie Stabenow (D-MI) as the top Democrat. Sources suggest that Toomey was an
unexpected choice, but also note that a majority of Senate Finance’s work is done in full committee.
Toomey did not have a statement by press time, but his web site provides information on his stance of health issues,
including that he believes the ACA is “fundamentally wrong in its approach to improving the nation’s health system.”
Toomey has fought to repeal the ACA’s medical device tax, pushed the IRS to clarify that volunteer firefighter’s be
exempted from the employer mandate, and helped eliminate the ACA’s 1099 reporting requirement.
Stabenow said in a statement that she looks forward to “working with my colleagues on both sides of the aisle
to find ways to continue to improve America’s health care system. We also need to preserve and protect Medicare,
Medicaid, Social Security, and the Affordable Care Act to ensure that every American has access to quality, affordable care.”
Other Republican committee members include: Charles Grassley (IA), Pat Roberts (KS), Mike Enzi (WY), Richard
Burr (NC), Dan Coats (IN), Dean Heller (NV) and Tim Scott (SC). Democratic members include: Maria Cantwell (WA),
Robert Menendez (NJ), Ben Cardin (MD), Sherrod Brown (OH) and Mark Warner (VA). — Amy Lotven
Burwell, Butterfield Hopeful More States Will Expand Medicaid
HHS Secretary Sylvia Burwell told an audience of health care consumer advocates Thursday (Jan. 22) that the ACA
is working and she is hopeful more states will choose to expand Medicaid in the coming year. Burwell, whose speech
kicked off Families USA’s annual conference Thursday (Jan. 22), also stressed that delivery system and payment reform
are the next hurdle to improving health care.
Despite the differences of opinion on the Affordable Care Act, there is “unanimous” agreement that the pre-ACA
system had under-delivered on quality, access and affordability, Burwell said. “It’s within our common interest to build a
health care system” that is easier to understand and empowers consumers to make better choices, she added.
Burwell hopes to see all 50 states expand Medicaid in ways that work for their residents and increase partnership
with other public and private groups. She reiterated that advocates should continue their work to help consumers understand the process of obtaining and effectively using health insurance.
Rep. G.K. Butterfield (D-NC), chair of the Congressional Black Caucus and co-chair of the State Medicaid Expansion Caucus, said it makes “no sense not to expand” Medicaid and pointed to a case where a local hospital closed because
its business model depended on bringing in more low-income patients through the expansion.
He stressed that two-thirds of the uninsured now live in non-expansion states, and said he hopes that the 35 members
of his caucus can work with others in both parties to bring more states on board.
Alan Weil, editor-in-chief of Health Affairs, echoed his support for state flexibility, saying that some states will only
expand Medicaid if they feel like they have a larger hand in it than the federal government. As states have to kick in more
funding after 2016, though, he said the politics of supporting expansion shift.
Weil said that the Medicaid expansion and the funding for the Children’s Health Insurance Program (CHIP) are both
pressing needs for advocates. CHIP funding is set to expire this fall if Congress does not act. — Rachel S. Karas
Study: Working Southern Whites Would Be Most Impacted By King Ruling
Non-Hispanic whites that live in the Southern states would be most impacted should the Supreme Court rule that the
ACA’s subsidies are not available to those enrolled in plans purchased through the federal exchange, according to a study
by the Robert Wood Johnson Foundation and the Urban Institute. The brief builds upon an earlier study that concluded
average premiums would increase by about 35 percent and about 8.2 million people would become uninsured should the
court rule against the administration in the highly anticipated King v. Burwell case.
According to the brief, about two-third of the individuals who losing tax credits would then become uninsured as
would about one-quarter of those not receiving credits. “Not surprisingly,” the report concludes, “those with incomes
below 400 percent of the (federal poverty level) would be most likely to become uninsured, although over 500,000
individuals with income about 400 percent FPL would lose coverage.”
Those becoming uninsured are more likely to be white, have a lower educational level, live in the South, and have a
family member that works in a small business, the brief says. Specifically, the brief estimates that a total 8.2 million
would lose coverage, 6.3 million of whom would have purchased coverage with the subsidies.
Of the 6.3 million, 3.8 million (or 61 percent) are white, 3.9 million, or 62 percent live in the South, 2.7 million (46
percent) work full time jobs, 2.1 million (35 percent) work part time.
Report co-author Linda Blumberg, senior fellow at Urban Institute’s Health Policy Center, says that many of the
takeaways from the report were expected as the data tracked with what is already known about the population purchasing
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
coverage in the individual market. But, he says, the rates of people that would become uninsured are “pretty stark.”
The fact that the majority of those that would be impacted are working was also expected, Blumberg says, because
those below the federal poverty level either get Medicaid in expansion states or no assistance in non-expansion states.
(Subsidies are only available to those earning from 100 to 400 percent of the federal poverty level). So this is a reminder
that subsidies are targeting modest income, rather than poor, individuals, she said. She also pointed out that many people
at risk of losing coverage have family members who work for smaller companies that are less likely to offer insurance.
Blumberg also stressed that while the majority of individuals potentially impacted by a King decision against the
administration are those who have gotten the subsidies, it would also impact other purchasers and other markets. The
composition of the insurance pool would change, Blumberg says, and that affects people buying exchange products with
their own money or purchasing outside of the exchanges. The financial implications are great for people who are low
income but also very significant for others, she said.
Researchers also found that a ruling against the administration would affect other coverage as well. For example,
about 445,000 individuals, mostly children, would not get coverage from Medicaid or CHIP because their parents would
fail to get screened if there is no potential to get the subsidies. Another 300,000 could lose access to employer-sponsored
covered, the report found. — Amy Lotven
HHS: 7.1M Have Selected Plans Through Healthcare.gov As Of Jan. 16
More than 7.1 million people selected qualified health plans (QHPs) via healthcare.gov from Nov. 15 through Jan.
16, HHS announced in its latest enrollment snapshot out Wednesday (Jan. 21). The numbers show a sharp increase in
enrollment ahead of the mid-January cut-off for February coverage after having slowed for several weeks after the first
deadline and through the holiday season.
“With just four weeks before the February 15 deadline and the end of Open Enrollment, more than 7.1 million
consumers are counting on the Marketplace for affordable health coverage,” HHS Secretary Sylvia Burwell said. “Last
week, just before the deadline for February 1 coverage, approximately 400,000 people across the country selected a plan
that worked for their family. Time is running out. If you don’t have health coverage, visit HealthCare.gov or contact the
Marketplace call center to learn about your options and the financial help that is available,” she adds.
According to HHS, there were 400,253 plan selections from Jan. 10 — Jan. 16, and 675,940 applications submitted.
In total, 7,156, 691 have selected plans and 9,44,388 applications have been submitted since the start of open enrollment.
HHS also provided a state breakdown of the numbers. Florida still leads the pack with 1, 270, 995 cumulative plan
selections, followed by Texas (918,890), North Carolina (458,676), Georgia (425,927) and Pennsylvania (422,484).
— Amy Lotven
Counihan: CMS Eying Ways To Avoid Overwhelming Consumers With QHPs
CMS is trying to find ways to promote choice in the exchanges while also limiting it enough to avoid overwhelming
consumers, Kevin Counihan,the CEO of the federal health insurance marketplace said on Thursday (Jan. 22) in an
indication that the agency may be considering standardizing plan benefits. Counihan also warned that the upcoming tax
season will likely be “clunky,” and said CMS is considering creating a special enrollment period (SEP) for people who
discover after the end of the open enrollment that they are on the hook for a penalty in 2015, but stayed silent on potential
contingency plans should the Supreme Court rule against the administration in King v. Burwell.
Counihan made the remarks as part of a panel at a Families USA meeting that also featured Virginia Health and
Human Services Secretary Bill Hazel, DC exchange director Mila Kofman and Catherine Teare, senior program officer at
the California Healthcare Foundation.
Counihan listed some improvements made to Healthcare.gov and consumer engagement, including reducing the
number of screens to sign up for coverage from 76 to 16 and automatically populating 90 percent of the application. HHS
Secretary Sylvia Burwell drives staff hard on improving customer experience, he said, and he thinks the department has
made progress. “We’ve got a ways to go,” Counihan said. “Infrastructure is getting better … It’s not where we want it to
be, though.”
He also said that HHS officials are beginning to understand the details of the Affordable Care Act from the administrative and operational side for the first time this year, and stood by his belief that rolling out the ACA is a five-year
implementation process, and that the administration is now in the bottom inning of the first year.
Every year is going to get better, he said.
CMS is now trying to figure out how to offer more choice for consumers while limiting it enough so as to not
overwhelm them, Counihan said. People are asking more sophisticated questions about products and network size that
show more understanding of how their coverage works, he added.
He provided no details in what CMS has been considering. However, in Connecticut — where Counihan headed the
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exchange during the first open enrollment period — plans were required to have standardized benefit design, meaning
they had the same out-of-pocket cost limits and deductibles. In a September interview with Inside Health Policy,
Counihan said it was too early to comment on whether that was something that could be adopted by the federal marketplace, but he did say that the concept is consistent with the goal of keeping things as easy as possible for consumers. “We
will be more successful the simpler we make it,” he said.
Counihan also affirmed that HHS is still considering creating a SEP for someone who discovers too late that
they may be subject to penalties in 2015. This could happen if a person files taxes after the Feb. 15 deadline for open
enrollment, and many consumer advocates — including Families USA and Enroll America — and other stakeholders have
urged HHS to take action.
“It’s something that has been raised many times and something that’s being considered,” Counihan said. “There’s no
decision on that yet. It’s got a bunch of implications both to our system and to the issuers because we’re all in this
together. It’s a very important type of systemic relationship but that interest is clearly something we’re very aware of,” he
added.
Though states have much to celebrate in terms of enrollment, officials still worry about what lies ahead with
tax season and pending lawsuits. Mila Kofman, executive director of the DC Health Benefit Exchange Authority, said the
exchange will begin sending out the first 1095-A tax forms in print and online to consumers next week “with a cover
letter that we think is in English, but we’re not sure … we’re preparing for a lot of confusion.”
Kofman expressed disappointment with the IRS, saying it seems like they lack the resources needed to educate the
public about ACA tax credits. “None of the states can provide tax advice so there are limits to what we can say to our
customers,” she added.
Counihan replied that tax season is “going to get a little clunky,” but “we’re going to ride it out.”
Kofman also said provider directories remain a large challenge for DC’s exchange: “Garbage in, garbage out,” she
said of data provided and the ability for consumers to understand it. “That is one area where we have to do better.”
Others on the panel agreed. A lot of people want to know if their provider is in the plan that they are looking at, and
that is still difficult to tell, Teare said.
Counihan said that tools to help consumers with provider directories are becoming more readily available and more
sophisticated. “Consumers are actually fairly patient,” he said. “We’re not there yet, but we’re going to get there.”
During his comments, Hazel asked Counihan for help in the case that the Supreme Court rules against the
administration in King v. Burwell and finds that subsides cannot be accessed via the federal marketplace. Virginia is one
of 34 states that uses Healthcare.gov as its state exchange, and Hazel said he can’t be the only one worried about the
impact of King.
“We’re starting from zero,” Hazel said of the prospect of having to build a state-run exchange. Though Virginia’s
politicians once considered the state starting its own marketplace, the idea was later scrapped because many did not want
to accept federal funds to create a local exchange. “At this point we’re going to need some quick training, and I’m
guessing there are a lot of states that are going to need a contingency,” Hazel added.
Administration officials have consistently said that they believe they will emerge victorious in the case, and have not
provided any insights into contingency plans.
Also during the panel, Kofman debuted enrollment numbers that showed more than 75,000 people had enrolled
through DC Health Link in private health plans or Medicaid from Oct. 1, 2013 through Monday (Jan. 19). Nearly 20,000
signed up in QHPs and around 40,000 were deemed eligible for Medicaid, she said. Almost 16,000 people, including
congressional offices, enrolled through the small business marketplace.
The District’s uninsured rate dropped by as much as 43 percent during the exchange’s first year in operation, and
more than 18,000 previously uninsured residents were covered through Health Link. — Rachel S. Karas
Exchange Round-Up . . . begins on page one
On Tuesday, the American Cancer Society, American Diabetes Association, American Heart Association and National
Multiple Sclerosis filed an amicus brief with the Supreme Court arguing that Congress never intended to limit subsidies to
states with state-based exchanges and that ACA advocates would have rejected such an idea when the law was being
crafted.
“Our organizations would have strenuously objected to any suggestion that the physical and financial health of
patients with serious diseases should depend on the entity administering the exchange in their state. We would have
objected even more strongly to any legislative provision that used patients’ well-being as a bargaining chip to induce
states to establish their own exchanges,” the groups wrote.
Families USA is filing its own amicus brief and will hold a press conference Wednesday with Rep. Sandy Levin (DMI), Sister Carol Keehan, president and chief executive officer of the Catholic Health Association, and patients who
could lose subsidies if the Supreme Court sides with King.
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
The amicus briefs arrive one week after the administration filed its response arguing that the text, structure and
history of the law make clear that the subsidies were meant for all Americans, not just those living in states that established an exchange.
In other King news, sources are increasingly suggesting that there may be a “short-term” legislative fix that would
allow subsidies to continue to flow to residents in FFM states should the court rule against the administration.
In an interview with the Washington Examiner, Sen. John Barrasso (R-WY) said that he expects the White House
would pressure Congress for a fix, which GOP members would use to leverage a wish list of changes, if the King case
goes against the administration.
“‘This president is going to try to force Republicans to pass a one-page fix that says, make all that he has done
illegal, and make it legal with a one-page bill,’” Barrasso said. “‘I don’t see Republicans doing that. I think if he does
want to continue subsidies for some period of time — which will be a limited period of time — that he’s going to have to
agree to make some significant, what he would consider concessions, that I would consider differently. I’d consider as
removing more damaging parts of the healthcare law. And that would be eliminating the mandates, giving more freedom
and flexibility to those 37 states who haven’t set up their own exchanges.’”
Barrasso said the GOP will still be working on legislation to replace the ACA, and that bill will be released prior to
the SCOTUS decision. “‘I think between now and the time the Court rules, we need to show the American people that we
want to limit the damage done by the healthcare law and prevent future damage,’” Barrasso told the Examiner. “‘There
are a number of people who have gotten subsidies. We want to make sure that there is a transition for them as we try to
transition the entire healthcare law to a more free market system,” he said.
Speaking of short-term fixes, Arkansas’ GOP Gov. Asa Hutchinson Thursday threw his support behind keeping the
state’s Medicaid “private option” through Dec. 31, 2016. “This avoids harm to the 200,000-plus on the Private Option
and it assures our hospitals and provides of financial stability,” he said. The new Governor also asked the state legislature
to create a task force to make recommendations on “an alternative health coverage model to ensure healthcare services
for vulnerable populations currently covered by the Private Option.”
Health care experts had suggested Hutchinson’s handling of the private option could be a test case of the tough
political choices that GOP-led states will face if the U.S. Supreme Court rules that ACA subsidies aren’t available in
federally run exchanges.
If that is correct, the governor’s strategy could lend more credence to the idea that Congress will enact a short fix —
with as many concessions as the GOP can get.
In other Medicaid news, CMS announced Tuesday that it has approved Indiana GOP Gov. Mike Pence’s
proposal to expand Medicaid using the state’s Healthy Indiana Plan, which relies on health savings accounts. The plan,
like the one put forth by Tennessee’s GOP governor, would allow beneficiaries to use the money to purchase employersponsored coverage. The plan also says that Indiana hospitals will help cover the state’s contribution in later years.
And last week, CMS published for the first time data that breaks out how many low-income adults received Medicaid
coverage due to the expansion. According to the reports, as of March 2014, 3.2 million adults were considered newly
eligible, about two-thirds of the 4.8 million adults in that category. The other 1.5 million had likely been eligible but not
enrolled in their states’ Medicaid programs.
Healthcare.gov CEO Kevin Counihan last week acknowledged that HHS is considering a Special Enrollment
Period (SEP) for people who find out too late that they may owe penalties for 2015. This could happen if someone files
their taxes after the Feb. 15 open enrollment deadline. Consumer advocates and insurance brokers have encouraged HHS
to create the SEP, and Counihan said staff is very aware of the issue. Counihan, speaking at the Families USA annual
conference, also said that CMS staff is currently looking at ways the agency can promote consumer choice of plans,
without overwhelming them. Healthcare.gov is an passive, not active, purchaser, meaning that it generally accepts all
plans offered by carriers as long as they are meaningfully different from one another. It is possible that CMS is considering becoming a more active buyer, or possibly standardizing plan designs, which a handful of state exchanges, including
Counihan’s old employer AccessCT, have done.
The president is slated to release his 2016 budget on Monday, and the Senate Finance Committee will hold a hearing
on the IRS budget on Tuesday followed by one on the HHS budget on Wednesday.
In the states
Tennessee’s Republican Gov. Bill Haslam is in his second week of a tour aimed at convincing state lawmakers to get
on board with his plan to use federal Medicaid funds to extend health insurance coverage to around 200,000 low-income
residents. The state’s Republican-led General Assembly will vote on Haslam’s Insure Tennessee proposal in a special
session called by the governor beginning Feb. 2.
In Pennsylvania, an eight-year-old program that connected around 5,000 uninsured residents with doctors and
physicians willing to donate medical care — valued at $46 million — is ending because its patients now have access to
insurance through the ACA exchange and Healthy PA Medicaid expansion. Project Access Lancaster County (PALCO)
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13
director Lisa Riffanacht told Lancaster Online that state officials knew the end was coming after the ACA was passed, but
are exploring ways to fill in remaining gaps in service and insurance education.
Colorado’s legislature gave initial approval Monday (Jan. 26) to two bills that increase oversight of its Connect for
Health Colorado exchange, the Colorado Springs Gazette reported. One bill allows state auditors to better analyze how
the exchange operates, while the other bill requires lawmakers to give consent before the exchange awards employee
bonuses. Both parties agree on the auditing bill but Democrats see the employee bonus bill as an “onerous check” that
increases government interference. The state Senate must vote on both bills again to pass them to the House.
The Denver Post also reported that another GOP bill proposing to repeal the Colorado Health Benefit Exchange Act,
which created the state’s marketplace, is scheduled to be heard by the Democrat-led state house health committee
Thursday (Jan. 29). If passed, the act would be repealed effective Jan. 1, and any “unencumbered monies” of the exchange would be transferred to the state’s general fund.
Californians in around 800,000 households received $3.2 billion in premium tax credits through the Affordable Care
Act last year, the exchange announced Monday. Individuals and families paid $1.1 billion in premiums, and nearly 90
percent of Covered California exchange enrollees qualified for subsidies. State officials said the average monthly subsidy
was $436 per household.
The U.S. Supreme Court decided Monday (Jan. 26) that it will not package Oklahoma’s case against federal ACA
subsidies with a Virginia case already under review. Oklahoma Attorney General Scott Pruitt had proposed that SCOTUS
pair the two cases in hopes of bypassing a federal appeals court’s review. Both states are questioning whether a state must
have its own health insurance exchange in order for low-income residents to qualify for federal subsidies — similar to the
issue debated in King v. Burwell, the SCOTUS case slated to begin March 4 that debates whether subsidies should be
legally available through the federal exchange, Healthcare.gov.
A Republican state legislator in Montana has proposed a bill that would block any Medicaid expansion or establishment of a state-run, online health insurance exchange without legislative approval. Democrats criticized the bill as
limiting health care solutions, though Democratic Gov. Steve Bullock supports another bill that seeks legislative approval
of Medicaid expansion and has not said he would grow the program without prior consent. If passed, the bill would create
significant roadblocks to a state-based fix if SCOTUS rules in favor of the plaintiff in King v. Burwell, outlawing federal
subsidies and potentially prompting states to create their own exchanges for residents to continue receiving tax credits.
Montana is one of the 34 states that use Healthcare.gov as its local insurance marketplace.
In Ohio, state Attorney General Mike DeWine, four public universities and a group of county officials are suing the
Obama administration over the transitional reinsurance fee levied through the ACA. Ohio must pay $5.3 million as part of
the program, which the plaintiffs called an unconstitutional use of funds that could go to other local needs.
Meanwhile, Ohio’s Republican Gov. John Kasich told GOP lawmakers in Montana that their party should not oppose
Medicaid expansion on the basis of “strict ideology” and instead touted the program’s growth championed in his own
state.
Lawmakers in West Virginia vote Tuesday on a GOP-backed bill that would repeal the state’s 2010 law setting up its
partnership health insurance exchange with the federal government. The state house’s health committee will first vote on
it before sending it to the larger assembly. The bill could put West Virginia at risk of losing $50 million to $235 million in
federal subsidies for nearly 20,000 residents. It would also do away with the in-person assisters who help consumers
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
navigate their options when buying health insurance. The state may switch to a state-run exchange later this year after the
Supreme Court issues its ruling on King v. Burwell.
Nevada’s Silver State Health Insurance Exchange released its state fiscal 2015-2016 request for applications and
instructions for grants for navigator entities Tuesday (Jan. 27). Available funding for navigator grants in state fiscal 2015
and 2016 is projected not to exceed $3,500 per navigator exchange enrollment facilitator, per month in southern Nevada,
and not to exceed $3,000 per navigator exchange enrollment facilitator, per month in Northern Nevada. The projection is
subject to change.
State lawmakers in Vermont and Rhode Island are debating whether to scrap their state-based exchanges for the
federal marketplace, after the former battled technological glitches and the latter is struggling to find the $19 million
needed to continue HealthSourceRI in the absence of federal funding. That means that should either join Healthcare.gov,
they endanger their residents’ subsidies that would otherwise be safe if the administration loses in King v. Burwell.
In the other direction, a Texas state representative filed two bills Jan. 21 that would create a state-based exchange.
One would require the state’s Health and Human Services Commission and the Insurance Department to start a local
health insurance marketplace, while the other would require the creation of a state exchange if SCOTUS decides that tax
subsidies may no longer be offered to customers who buy plans through the federal marketplace. Neither bill is likely to
gain traction in Texas’ overwhelmingly GOP-led legislature.
And in Massachusetts, Republican Gov. Charlie Baker appointed Louis Gutierrez to replace Jean Yang as executive
director of Massachusetts Health Connector and the state’s technologically plagued health insurance exchange website.
Gutierrez served in the last three GOP administrations and worked for the IT consulting firm Exeter Group for seven
years. He also served on the boards of Harvard Pilgrim Health Care and New England Health Exchange Network, and
worked as Harvard Pilgrim’s chief information and technology officer under Baker. — Amy Lotven and Rachel Karas
CMS Says OIG Study Spurred Changes To Exchange Contracting
CMS agreed with all six recommendations provided by the HHS OIG as part of a report that concluded the agency
had failed to meet contracting requirements with the companies it depended on to plan and build the federal health
exchange, and is now working to establish clear lines of authority, prioritize goals and create metric-driven quality
reviews. CMS says a task force was appointed to take a program-wide look at Healthcare.gov’s costs to better manage
acquisitions, and the agency is enforcing a strict governance structure over contracts and is better training its acquisition
employees.
New leadership will oversee the federally facilitated marketplace with special attention to operations like contract
management, CMS said in its response to the report.
The HHS Inspector General report out Tuesday (Jan. 20) highlighted several mistakes made by CMS as it obligated
$800 million through 60 contracts awarded to 33 companies.
“CMS is working to develop a strategic and unified view of the Marketplace and its other major IT contracts and
costs,” CMS Administrator Marilyn Tavenner and CMS Assistant Secretary for Financial Resources Ellen Murray wrote
in a Nov. 14 letter to OIG. “CMS is taking the HHS OIG’s findings and recommendations seriously, and is using the
report as an opportunity to make needed change.”
The OIG report noted that outside groups were needed to create technical requirements for Healthcare.gov, build the
application, conduct security monitoring and testing, and secure infrastructure that supports the FFM and the Federal
Data Services Hub. But CMS did not plan for a lead systems integrator to coordinate the contractors’ efforts before the
federal exchange was launched in 2013, a move that could have avoided a botched first open enrollment period altogether.
Additionally, the report said, there was no single point of contact responsible for fielding contractors’ efforts and
working toward a common project goal with all 33 companies. CMS perceived CGI Federal Inc. to be the project’s lead
integrator, but the company did not share that understanding, according to the OIG.
“The CMS Administrator and Chief of Staff acknowledged that, in retrospect, the role of a lead integrator should
have been given more consideration, as the Federal Marketplace project was too complex not to have an integrator,” the
report said.
“The value of a systems integrator was a key lesson learned from CMS’s experience implementing the Marketplace,
and the assessment of whether to assign a systems integrator will be a CMS best practice when planning for a complex IT
project,” Murray and Tavenner said in their letter.
Similarly, CMS did not develop an overarching acquisition strategy for the FFM or perform all required
oversight activities, nor did it leverage all available acquisition planning tools and contracting approaches to spot and
mitigate risks.
Acquisition plans that would have dictated how contracts were competed and companies chosen, as well as set
Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
15
schedules for decisions to be made during the planning process, were not required for 53 contracts with a total $1.3
billion value.
Contracts often lacked common planning information like potential risks, constraints, market research, required
signatures from CMS officials, milestone schedules and independent cost estimates. “(CMS) operated without a comprehensive roadmap when awarding the Federal Marketplace contracts,” the report concluded.
The agency also contracted in a way that may have restricted the number of technically acceptable proposals for
much of the key work on the FFM, and chose contract types that put the risk of cost increases solely on the federal
government.
“The complexity of the Federal Marketplace underscored the need for CMS to select the most qualified contractors;
however, it did not conduct thorough past performance reviews of potential contractors,” the report found.
Only two of the six key contracts were reviewed by the CMS Contract Review Board before award, though all six
met the criteria for oversight. Those were awarded to CGI Federal Inc., Quality Software Services Inc. (QSSI), Science
Applications International Corporation (SAIC), IDL Solutions Inc. and Accenture Federal Services at a total estimated
value of $464 million.
Sixteen companies were asked to submit proposals for those six main contracts, and fewer than 10 companies
responded for four contracts. Not all of the proposals were technically acceptable, further narrowing the field. For 35 of
the remaining 54 FFM contracts, CMS requested or received proposals from one company and awarded them a total
estimated value of $658 million.
“For 21 of the 35 contracts, CMS requested a proposal from only 1 company,” the report said. “For an additional 14
contracts, CMS requested proposals from multiple companies, but received a proposal from only 1 company for each
contract. CMS then awarded the contract to the one company that submitted a proposal.”
The Office of the Inspector General recommended that CMS:
• Ensure that acquisition strategies are completed for all major IT systems.
• Consider ways to attract highly skilled IT contractors and develop contingency plans for when few companies
submit technically acceptable proposals for contracts that are critical to the success of major IT investments.
• Assess whether to assign a lead integrator for future IT projects with complex requirements that require the coordination of multiple contractors.
• Determine whether approved checklists are filled out completely and accurately, confirm the applicability of
contract file documents, and determine whether appropriate documents are contained in the contract files.
• Ensure that all contracts that are subject to its Contract Review Board requirements undergo these reviews and
consider limiting review waivers for key contracts in major initiatives.
• Strengthen acquisition planning requirements.
• Conduct comprehensive reviews of companies’ past performance to ensure that it contracts with reliable companies.
CMS agreed with the recommendations, but also defended the quality and performance of the exchange. “A
vast majority of the contracts and task orders did not have performance issues and delivered quality services or products
on time and within budget,” Tavenner and Murray said.
However, they added, “CMS has “moved aggressively to implement extensive contracting reforms, bring in
new leadership to oversee Marketplace operations, hire a systems integrator and end our largest contract with CGI
and move to a new type of contract with Accenture that rewards performance and reduces risk to the federal
government.” — Rachel S. Karas
Enroll America, Turbo Tax To Educate Consumers On ACA’s Tax Implications
The advocacy group Enroll America and Intuit TurboTax announced Wednesday (Jan. 21) that they are partnering in
a campaign to inform consumers about how the Affordable Care Act will affect their taxes and to help them enroll in
health coverage. The news comes as the administration continues to prep the public for the upcoming tax season and as
more stakeholders are highlighting the tax penalties faced by people who can afford but choose not to purchase insurance
coverage.
Ann Fillipic, president of Enroll America, says that from conversations in the community it is clear that taxes, and the
fine for not enrolling in coverage, are on consumers’ minds. “For more than 30 years, TurboTax has simplified taxes and
is now doing the same for health care compliance and we’re excited to work with their tax experts to make sure that
consumers understand what their health insurance status means for the upcoming tax season,” she said.
“By teaming up with Enroll America, we can help our customers better understand all of their coverage options and
the impact those decisions will have on their taxes,” added Sacha Adams, ACA product leader for TurboTax Health.
“We’re committed to ensuring that Americans have all of the information they need to make informed choices for
themselves and their families.”
HHS recently released fact sheets on tax filing questions, held a conference call with tax preparers, and announced an
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
awareness campaign that will involve contacting people via phone , email and text. The federal and state-based exchanges
are also sending out the 1095-A forms that people with exchange plans must fill out and file.
Meanwhile, more stakeholders are beginning to ramp up messaging on the penalties faced by those who can
afford to but opt not to purchase coverage. Earlier this month, Covered California said it would be stepping up
messaging about the penalty for non-coverage which starts at the greater of $95 or 1 percent of income for 2014, increases to $395 or 2 percent of income in 2015, and then to $695 or 2.5 percent of income in 2016.
“It’s important that consumers understand now that the cost of remaining uninsured is rising,” Covered California
Executive Director Peter Lee said. “This year, a family of four earning $70,000 a year could pay close to $1,000 in their
taxes if they remain uninsured in 2015. As the penalty increases, it makes more and more sense for those who have been
waiting on the sidelines to get in and get coverage,” he added.
Lee estimated last week that about 1 million Californians could be on the hook for penalties, although the numbers
are not clear.
Zach Baron, senior policy analyst at Enroll America, said the group has always highlighted the fact that financial
assistance is available to help purchase coverage. But, Enroll America has also informed consumers that there is a fine for
not having coverage so that they have all the facts when exploring options, he said.
Baron was thrilled about the new partnership with TurboTax, and pointed out that consumers using the tax service
will be able to schedule in-person assistance through Enroll America’s “Get Covered Connector” button on the Turbo Tax
site. Users need only put in their zip code and they can find an assister in their area and schedule an appointment.
He also said that as the group holds its hundreds of events around the county, staff are starting to get more tax-related
questions. Enroll America has been engaged with a number of partners over the fast few months to help train staff and
volunteers to ensure that consumers’ tax-related questions can be answered.
Because it is the first year that consumers will be dealing with health-related questions and forms in the tax filing
office, stakeholders expect there will be many questions. Baron says that what worries him the most in the upcoming
season is that, like with any new process, there may be people who aren’t sure what to do with a particular document or
where to go to for help.
Enroll America will be ramping up its efforts, and hosting more events leading up to Feb. 15 enrollment deadline.
Additionally, Enroll America has joined other advocates in asking HHS to create a Special Enrollment Period for
people who file taxes after the Feb. 15 close of open enrollment, and discover that they will be subject to a penalty next
year. Without such a special enrollment period, such individuals — who would likely be very motivated to purchase
coverage — will have no opportunity to do so.
Baron says that Enroll America is hopeful HHS will take action on the SEP at some point.
All we can do right now is work to make sure consumers are aware of the Feb. 15 open enrollment deadline, he said.
FFM CEO Kevin Counihan said Thursday (Jan.22) that officials are aware situation and have yet to make a decision
on a SEP. — Amy Lotven
Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015
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BCBS Study Finds Wide Disparity In Cost Of Knee, Hip Replacements
The Blue Cross Blue Shield Association (BCBSA) is highlighting the variations in cost for hip and knee replacement
surgery at U.S hospitals as part of an effort to encourage more issuers to empower patient decision-making by improving
transparency on price and quality.
Some U.S. hospitals charge tens of thousands of dollars more than others do for the same knee and hip replacements,
now two of the country’s fastest-growing medical treatments, according to a new study released Wednesday (Jan. 21) by
BCBSA and Blue Health Intelligence. That disparity can vary as much as 316 percent in 64 markets nationwide.
Maureen Sullivan, senior vice president of strategic services and chief strategy officer for BCBSA, told Inside
Health Policy that staff expected to see price variations in their findings, but the extent of it was “a bit of a surprise.” The
researchers aren’t sure if such wide swings in price are a new phenomenon, she said, though the association has nine
years of data to dig deeper than the study’s three-year range.
BCBSA plans to release further studies exploring other aspects of quality and cost on transplant, replacement,
cardiac, spine and bariatric surgeries.
The report on hip and knee replacements was based on three years of independent BCBS company claims data and
shows that prices for identical procedures can quadruple in cost, depending on which hospital a patient chooses within a
market or in which city the patient has the surgery.
“As more consumers shop for health care, insurance companies must use their data to empower members and
employers with information that demonstrates cost and quality of doctors and hospitals and helps them find the highest
value options for care,” the report concludes.
“The average typical cost for a total knee replacement procedure was $31,124 in 64 markets that were studied.
However, it could cost as low as $11,317 in Montgomery, AL, and as high as $69,654 in New York, NY. Within a market,
extreme cost variation also exists. In Dallas, TX, a knee replacement could cost between $16,772 and $61,585 (267
percent cost variation) depending on the hospital,” the report said.
“Similar trends also were seen for the average typical cost for a total hip replacement procedure, which averaged
$30,124. However, it could cost as low as $11,327 in Birmingham, AL, and as high as $73,987 in Boston, MA, which had
the greatest variance with costs as low as $17,910 (313 percent cost variation).”
The report notes that a “lack of cost variation within a market can be negative for consumers when prices are
consistently high.”
The findings confirmed wide price disparities for knee and hip replacements within and between markets as their
popularity booms: A study in the June 2014 Journal of Bone and Joint Surgery showed that typical knee replacements
more than tripled and typical hip replacements doubled between 1993 and 2009. The American Academy of Orthopaedic
Surgeons similarly reported that 645,062 typical hip replacements and 306,600 typical knee replacements were performed
in the U.S. in 2011.
Sullivan said the findings show that affordability of care is not enough, and that hospitals and patients must
seek both high-quality and reasonably priced care. The report’s timing is important because it emphasizes transparency and consumer assistance at a point when more tools are now available for patients to navigate their choices. It may
also prompt hospitals to innovate in care or increase cost-sharing to better serve patients.
Extreme price variation can have large financial consequences for individuals and employers as well as serious
implications for a national health system exceeding its economic capacity, according to Sullivan. “To effectively address
health care costs and ensure access to care, consumers, employers and industry leaders must have information on these
price variations and be provided with the tools to become informed shoppers,” she said in a statement on the study.
Sullivan added that it is unclear what factors contribute to the magnitude of an area’s price variation. She believes the
same variations can be found in hospitals outside the BCBS market because of their similar cost structure. — Rachel S. Karas
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Health Exchange Alert - www.InsideHealthPolicy.com - January 28, 2015