Let’s look at some important health care trends from last year as an indicator of what to expect in the months ahead.
ACA Still in Court
A protracted legal battle has seen the Affordable Care Act (ACA) ruled unconstitutional by a federal court, yet still remain very much alive. In the past 14 months, the ACA’s individual mandate has been repealed and its remaining provisions proclaimed invalid. However, an immediate appeal has allowed the ACA to remain in effect.
Attorneys general from 20 states, including California, filed a petition with the U.S. Supreme Court for a fast-track review of the U.S. 5th Circuit Court of Appeals ruling. They argued the ACA was too important to be returned to the lower court, saying “The lower court’s actions have created uncertainty about the future of the entire Affordable Care Act, and that uncertainty threatens adverse consequences for our nation’s health care system, including for patients, doctors, insurers, and state and local governments.”
On January 21, the Supreme Court rejected the states’ request to expedite the challenge to the lower court ruling. The rush request was declined; however, on March 2, the country’s highest court announced it will take a new look at the ACA — with filings this summer and a hearing in fall. As a result, the ACA will likely remain a hot topic leading up to the November election, with a ruling on the latest appeal expected in the spring of 2021.
California Individual Mandate
Uncertainty surrounding the legality of the ACA has caused the number of insured Americans to slide. The Kaiser Family Foundation says totals have fallen by 1.2 million since the individual mandate was effectively repealed in 2017 when the penalty was reduced to zero starting in 2019. It’s estimated even more Americans lost access to health coverage last year.
In response, the state of California enacted its own individual mandate penalty to make sure that residents are insured. While 2020 ACA enrollment numbers are not final, California reported a 41% increase in enrollment over 2019, as of January 31, with approximately 418,000 Californians newly enrolled in individual or family plans. Total enrollment in the state exceeds 1.5 million.
To address fears that unaware residents may be blindsided by a heavy fine, California recently extended its 2020 enrollment period through April. This will give people an opportunity to get coverage and comply with the state’s new 2020 individual mandate.
Under new mandate, individuals who can afford health insurance but go without it are subject to a financial penalty when filing their 2020 California taxes in 2021. The penalty can be more than $2,000 for a family of four.
Employer-Sponsored Coverage
According to data from the 2019 Kaiser Family Foundation Employer Health Benefits Survey, California tops the list of states with the greatest number of individuals with employer-sponsored health insurance. Forty-seven percent of the state’s population – more than 18.2 million people – have access to health insurance through their employers.
Several states in the Midwest and Northeast have the greatest percentage of residents with employer-sponsored health insurance coverage:
- Utah – 60% of residents
- North Dakota – 58% of residents
- Three-way tie: Minnesota, New Hampshire, and Wisconsin – 57% of residents
- Three-way tie: Maryland, Nebraska, and New Jersey – 56% of residents
- Three-way tie: Iowa, Kansas, and Massachusetts – 55% of residents
Forecasts predicting group health insurance premium increases of 5-6% in 2020 show that employers may face a larger share of the cost. Rate increases will have a large impact in communities with lower unemployment — especially where half or more of the population gets its health coverage through the workplace.
Drug Cost Legislation
The U.S. House of Representatives passed comprehensive drug-cost-control legislation, in the form of H.R. 3, in 2019. It requires the Centers for Medicare & Medicaid Services (CMS) to negotiate the prices of certain drugs, including insulin and at least 25 single source, brand-name drugs that do not have generic competition. It also gives the government the authority to negotiate the price of up to 250 prescription drugs that account for the greatest national spending or spending under the Medicare program. Consumers would benefit because the new legislation limits manufacturers’ ability to raise drug prices and establishes the first-ever cap on out-of-pocket drug costs for those enrolled in Medicare.
This is a 180 degree shift from current federal law, which prohibits the CMS from negotiating prices. It’s unlikely, however, that the Senate will act on the bill. Things could change depending on the results of the November election.
It’s worth noting some action in drug prices is possible at the state level. In January, California Governor Gavin Newsom announced he wants the state to begin selling its own brand of generic prescription drugs to reduce health care costs. Watch for more details as the state legislature contemplates Newsom’s proposal.
No Surprise Medical Bill Legislation
While there was considerable public outcry in 2019 over unexpected medical bills, which occur when a patient is treated by an out-of-network provider at an in-network facility, attempts to deal with it legislatively failed. As Kaiser Health News reported in September 2019, “even knowledgeable, proactive people with comprehensive insurance can find themselves whisked away to an out-of-network hospital in an emergency or treated by an out-of-network anesthesiologist at an in-network hospital they selected.”
Committees in both the Democrat-controlled House of Representatives and the Republican-controlled Senate passed measures last year to address the issue. However, private equity and venture capital firms reacted with a lobbying and advertising blitz that helped deflate enthusiasm in Congress. The year ended with no agreement on the path forward. Stay tuned for more negotiation this year.
What Lies Ahead?
An employee benefits agent can provide you with more information on trends and forecasts in your specific area, so you can position yourself for success in 2020. If you don’t already have an agent, we can help you find one.
