Category: Public Health

What is Surprise Billing?

Surprise billing refers to any unexpected bill received by patients but is especially prevalent with balance billing. Balance billing is the process of billing a patient the remainder of what insurance has not agreed to cover for a medical service or treatment. Even though emergency services are required by law to be provided regardless of ability to pay, surprise bills represent both a perceived and realistic hurdle to patient care due to their long-term financial effects. 

The Impact of Medical Debt

Balance bills can range widely in cost, and significant bills can cause patients to go into medical debt and suffer from financial stress. Medical debt is an issue that impacts millions of Americans: in 2017, 19% of American households reported medical debt that could not be paid in full. This debt amounted to an average of $2,000 even in households without regular monthly medical expenses. People with disabilities and low-income families—particularly those on aid programs such as WIC—are disproportionately affected. Additionally, 30% of those with medical debt had difficulty paying for necessities (food, heat, housing, etc.) as a result of healthcare costs. The threat of medical debt may prevent those who require medical attention from seeking care. In 2018, 44% of Americans did not visit a doctor when sick or injured due to cost. 

Expanding Care Availability and Affordability

President Biden signed the No Surprises Act (NSA) into law as part of the Consolidated Appropriations Act of 2021. The NSA intends to protect patients from surprise medical bills, and expand the availability and affordability of medical services through the following provisions:

1. The NSA prohibits insurers from billing more than the Qualifying Payment Amount (QPA), or the median in-network rate, for emergency services. Services such as air ambulance transportation are included in this but ground ambulances are not.
2. Out-of-network services provided at in-network facilities can only be charged at the median in-network rate. This protects patients from receiving surprise bills when they do not select who provided their care.
3. The NSA establishes a notice system that requires that patients be aware of the approximate cost of out-of-network services before receiving care. This estimate explains the entire cost of the service and what the patient would be expected to pay, ensuring that patients are informed and free to choose between in-network and out-of-network care. Previously the equivalent service of Good Faith Estimates from the Affordable Care Act was available upon request, but these are now required in all cases. 
4. The NSA establishes a third-party dispute process for both patients and healthcare providers, intending to remove patients from medical billing disputes. These third-party mediators consider factors such as the “usual and customary rates” for the services, and will then propose what they consider a fair and reasonable payment amount. Nonetheless, this Independent Dispute Resolution (IDR) process is currently the subject of legal discourse due to issues relating to administrative law and its potential effects on healthcare providers.

Concerns and Legal Delays

The Independent Dispute Resolution (IDR) system has consequences for both healthcare providers and patients. Larger invoices can partially be attributed to the commonplace upcharges for out-of-network services. Studies have shown that physicians collect a higher percentage of the cost when the service is out-of-network. Meanwhile, the IDR is intended to protect patients from extraneous expenses but the process itself charges administrative fees ranging from $50 to $940 per party. The decision of the mediator is not binding, meaning that the insurer may disregard advice and proceed to bill the initial balance. Conversely, success by the mediator could result in lower payments to healthcare providers, potentially reducing available hospital resources and quality of care. Healthcare providers may now decline to render services if they will not be compensated properly. 

At least six lawsuits (some having been consolidated) have been discussed in federal district courts over the parameters of the NSA, finding errors in the arbitration (IDR) process and QPAs. Some critics take issue with potential bias in the IDR process as insurers likely have more expertise with specific services and resources, as well as experience in negotiating payment disputes. Furthermore, some critics believe the process will increase premiums while others believe this may incentivize insurers to set falsely lower rates. In response to many of these complaints an interim final ruling was released to clarify the intent of the IDR process. In February 2023, a federal judge ruled in favor of the Texas Medical Association (TMA) in its lawsuit against the Department of Health and Human Services, stating the “core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate,” in reference to the clarifications previously made over the IDR process. The TMA received notable support from the American Hospital Association and American Medical Association, among others, who agree that using only QPAs does not properly give weight to the compensation practitioners deserve. The most recent decision means that QPA’s are not the sole consideration in mediation, but these lawsuits are ongoing and decisions may continue to change.

Conclusion

The No Surprises Act is intended to protect patients from surprise bills in scenarios out of their control. Yet the bill itself is in legal discourse due to the wording of the dispute resolution process. Its impact on physician and hospital funding is still to be resolved, but overall, the Act has already made progress in reducing unexpected medical bills as intended.

Introduction

In resuscitating the previously stalled Build Back Better Act, the Senate Democratic Caucus has reached a reconciliation passage consisting of investments in climate/energy, IRS enforcement, deficit reduction, and healthcare in the 725-page Inflation Reduction (IRA). While the $300 billion is far from the original agenda that President Joe Biden had envisioned when Democrats regained the federal trifecta, it will still institute substantial changes to the US healthcare landscape as we know it, primarily intending to lower prescription drug costs for Medicare and private insurance enrollees. According to a CBO report, the prescription drug provisions, set to begin implementation in 2023, are projected to reduce the federal deficit by $288 billion by 2031. Additionally, it’s aimed at reducing Medicare out-of-pocket spending and limiting drug price increases.

Medicare Drug Price Negotiation

One of the key provisions rescued from the Build Back Better legislation enables Medicare to negotiate prescription drug prices. Currently, retail prescription drug benefits covered under Medicare Part D are provided by private plan sponsors contracted and approved by Medicare. Since its enactment, Part D is governed by the “noninterference” clause, establishing that the Secretary of Health and Human Services “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP [prescription drug plan] sponsors, and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.” Concurrently, for physician-prescribed drugs covered under Part B, Medicare reimburses providers 106% of the Average Sales Prices (ASP), the average price for all non-federal purchases, including rebates. 

Under the IRA, however, the Secretary of Health and Human Services will be required to negotiate prices for high-priced drugs covered under Medicare. This will apply to top-spending brands and biologic drugs without generic or biosimilar equivalents covered under Medicare Part B or Part D and are at least nine years (small-molecule drugs) or at least thirteen years (biologicals) from FDA approval. Beginning in 2026, the Secretary will be limited to negotiating 10 Part D drugs, 15 Part drugs in 2027, 15 Part B and Part D drugs in 2028, and 20 Part B and Part D drugs in 2029 going forward. 

Rather than simply allowing the Secretary to negotiate drug prices as in the previous House-passed BBBA, the IRA closes the “rogue Secretary” loophole by requiring the Secretary to negotiate the maximum number of drugs that year, to the extent that the number of drugs is eligible for negotiation. CBO predicts $99 billion in Medicare savings from IRA’s version of the drug price negotiation provision, as opposed to $76 billion for its BBBA counterpart.

Pros and Cons of the Medicare Drug Price Negotiation Provision

A recent Kaiser Family Foundation Tracking poll found that, after hearing arguments on both sides, 83% of respondents are in favor of the federal government negotiating the Medicare drug prices. 

Significant biomedical innovations, including vaccine development during the COVID pandemic, have come at a high cost. In 2019,  the US spent more than $1,126 per capita on prescription drugs, following a steep increase from $831 in 2013. Comparatively, countries like the United Kingdom, Australia, and Germany paid $285, $434, and $825 respectively in 2019. For example:

• Dulera, an asthma medication, has a US listing price 50 times more than that of its international average. 
• Januvia, a diabetes drug, and Combiga, for glaucoma, cost about 10 times more. 
• Insulin, costs $98.70 per vial in the US, versus $6.94 in Australia. 

This exacerbated the cost-related noncompliance situation in the US, with roughly 18% of adults, especially seniors, reporting that they skip their prescribed medications due to cost. In peer nations, this proportion of cost-related nonadherence is nearly unheard of. 

One of the biggest opponents of this provision is the pharmaceutical industry. They argue that by empowering the HHS Secretary to negotiate drug prices, long-term innovation in medical development will be stifled. To that point, the new CBO report estimates that 15 out of 1,300 potential drugs, or 1%, will not be commercially available in the next 30 years. A separate study from the University of Chicago analyzing the analogous Medicare negotiation provision from the BBBA paints a bleaker picture. It projects a $663 billion, or 18.5%, decline in research and development spending through 2039, resulting in R&D funding delayed by up to seven years and 135 fewer market-available drugs for consumers. 

Critics of the law also indicate several possible implementation challenges to the way the negotiation provision is designed. For instance, since the IRA gives Medicare the authority to regulate high-revenue drugs that have been FDA approved for at least nine years and do not have a competitor—generics are only allowed to enter the market to compete with their name-brand counterparts after the expiration of their patents. However, the market entry period, the interlude between a drug’s launch and first generic entry, for high-selling drugs is around 13 years. Therefore, critics argue Medicare’s regulatory negotiations may be delayed. Additionally, drug manufacturers can make agreements with generic drug producers that allow the generic to be available on the market to be sold in only a small quantity prior to the end of the patent protection period. In doing so, drug manufacturers can evade Medicare’s price-setting authority, rendering it essentially inept. 

Inflationary Cap on Drug Manufacturers
Reining in prices for people with Medicare and private insurance is one of today’s biggest healthcare policy demands. The IRA will institute rebates on drug manufacturers that increase prices at a rate greater than that of inflation. This provision will be implemented starting in 2023, using 2021 as the base year of the inflation metric. Due to the disincentivization of list prices reducing spending and rebates as sources of new revenue, the CBO estimates a net federal deficit reduction of $100.7 billion over 10 years. 

The number of individuals, whether Medicare-covered or privately insured beneficiaries, who will have lower out-of-pocket drug costs in a given year under this provision is dependent on how many and which drugs will experience lower price increases and the extent of the price changes relative to 2021’s baseline.

Pros and Cons of the Inflationary Cap Provision

The status quo has prompted many to be in favor of an inflationary cap. In 2021, drug manufacturers of 900 brand-name drugs increased prices by a record average of 4.2%. Between 2018 and 2019, half of Part D covered drugs experienced a price increase beyond that of the 1.8% inflation, with some reaching as high as 19.7%. 

While the Medicare program has long existed without an inflationary cap, the Medicaid program has had one in place since 1993. In terms of holding down prescription drug spending, it’s largely successful as Medicaid now pays the lowest prices of all federal healthcare programs. A 2015 HHS report indicates that the provision is responsible for more than half of the existing price differential between the same products under Medicare and Medicaid. Consequently, the Medicare Payment Advisory Commission (MedPAC) and HHS have both advised that such a provision in Medicare can lead to significant savings.

A similar provision appeared in both the 2019 Prescription Drugs Pricing Reduction Act (S. 2543) and the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3), and the CBO projected up to $10 billion over 10 years in reduced cost-sharing and premiums. While the CBO anticipated that the inflation rebate will reduce the cost of prescription drug benefits in commercial insurance plans, it also anticipated that manufacturers would increase the launch prices of new drugs to balance out the rebate’s effects. Additionally, a Milliman report concluded that the provision would result in modest price increases for private insurance in the commercial market. 

In terms of the federal budget, the increased federal savings will eventually reduce Medicare program spending. It will also result in a moderate gain in tax revenues due to employers increasing taxable wages for their employers rather than having to pay insurance premiums. Furthermore, since state Medicaid programs already have instated inflationary rebates, smaller increases in drug list prices will reduce the states’ rebate amounts.

Background

Since the Covid-19 pandemic, there has been an increase in the prominence of telehealth services, especially for mental healthcare. As a result, previous government policies regulating telehealth have been reevaluated to consider the challenges surrounding the Covid-19 pandemic. 

Telehealth occurs in three categories: real-time communication (think Zoom, Google Meets, telephone, etc), store-and-forward (references the transmission of data, images, sounds, or video from one site of care to another site of care for evaluation), and remote patient monitoring (refers to collecting a patient’s vital signs or other health data while the patient is at home or another location, and transferring the data to a remote provider for monitoring and response as needed).

One argument for regulating telehealth is for privacy and security concerns. The Health Insurance Portability & Accountability Act (HIPAA) is a major concern for telehealth, especially telehealth for mental health (telemental health). The popular teletherapy apps BetterHelp and Talkspace collected and shared metadata with third-party vendors for targeted advertising, according to a recent report by Jezebel. HIPAA concerns are especially important for telemental health because of the sensitivity and confidentiality of the conversations patients have with their mental health providers. Additionally, another argument for regulating telehealth is that there are still debates about the efficacy of telehealth for mental health.

Recent Developments in Telehealth

1. Permanent telehealth policies (post-Covid): 37 states enacted 51 bills to make temporary flexibilities permanent post-Covid. These policy changes include Arkansas expanding the list of providers eligible to conduct telemental health for Medicaid recipients and required coverage for group therapy, crisis intervention services, substance use assessment, and other telemental health services.
2. Temporary telehealth policy changes: All 50 states, D.C. and Puerto Rico implemented some form of telehealth policy change during the Covid-19 pandemic. These policy changes include Connecticut enacting legislation to extend certain Covid-related changes until June 2023, including requiring payment parity (equal insurance coverage for in-person and virtual medical appointments) and expanding the list of providers eligible to use telehealth.
3. Non-legislative action (governors’ offices): Some states took non-legislative action—through governors’ offices, Medicaid agencies, licensing boards, and other state agencies—to make Covid-related changes permanent. These non-legislative actions include California’s Department of Health Care Services, which operates the state’s Medicare program, making Covid-related changes permanent by implementing payment parity for services delivered via telehealth in real-time and coverage for audio-only telephone visits.
4. Increased funding for new telehealth initiatives: The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress included $200 million for the Federal Communications Commission to expand telehealth services across the country.

One argument in favor of deregulating telehealth is there is a shortage of mental health professionals, and bureaucracy makes it hard to offer telehealth between state lines. Additionally, the pandemic has made it harder for people to access their providers in-person. Currently, telehealth is inaccessible to many, due to the cost or lack of internet access. Deregulations for this inaccessibility could include forcing Medicare and Medicaid to adopt payment parity for telehealth and in-person medical appointments, reducing the cost, as well as subsidizing internet access for low-income folks.

Future developments in this issue include a further $100 million from the Universal Service Fund administered by the FCC which will finance a three-year Connected Care Pilot program to subsidize internet connectivity for healthcare providers (associated with CARES Act). Additionally, many states which implemented temporary telehealth policy changes will have to make decisions about which reforms to keep.

The heart of this issue is the government’s role in regulating vs. deregulating telehealth and telemedicine, and it comes down to the states mostly instead of the federal government. Will HIPAA privacy concerns stand in the way of telehealth accessibility, which is already inaccessible to many who lack internet access and economic capital? Will payment parity and the loosening of licensing restrictions for interstate telehealth appointments prevail over the questioned effectiveness of telehealth and telemedicine? Will the deregulations of telehealth that have already occurred be here to stay, especially once the pandemic is over? Is telehealth the future of healthcare, or are in-person medical appointments more effective?

Background

Obesity is a severe health concern across the world, and can contribute to other health problems including cardiovascular risk factors, high blood pressure, and social and psychological problems. Currently, more than 30% of U.S adults are obese and obesity rates are high among U.S children. According to the Division of Health and Nutrition Examination Surveys, obesity rates in U.S children and teenagers has more than tripled since the 1970s. The most recent Centers for Disease Control and Prevention (CDC) data shows that about 20% of U.S children are obese. Adolescents have a higher prevalence of obesity (22.2%) than children aged 2-5 years (12.7%). The childhood obesity rate is disproportional among race groups. Hispanic children are more likely to be obese (26.2%) than non-Hispanic Black children (24.8%), non-Hispanic White children (16.6%), and non-Hispanic Asian children (9.0%). 

The obesity rate among U.S children aged 2-19 years old, 1963-1965 through 2017-2018. (Source: National Center for Health Statistics) 

Childhood obesity is a serious public health issue because it affects the physical and mental health of children, and it can have major ramifications for their adulthood health. Obesity can lead to high blood pressure, diabetes, and other illnesses later in life. Childhood obesity could also cause mental problems such as depression and poor self-esteem. Simmonds et. al.’s study suggested that a person with a history of childhood obesity is five times more likely to develop obesity in adulthood than those without a history of childhood obesity. 

Causes of Childhood Obesity

Children are more susceptible to external environmental influences because they are immature and not financially independent. The causes of childhood obesity can be categorized as lifestyle issues, family influences, and socioeconomic factors. 

• Lifestyle issues: The leading causes of childhood obesity are the same as common obesity. Having unbalanced or unhealthy diets—for example, consuming high-calorie foods, candies, and sugar-sweetened beverages—cause excess weight gain. Physically inactive children are at risk of developing childhood obesity. 
• Family influences: Highly controlled parental feeding styles—including pressuring or forcing children to eat and rewarding them with food—increase the prevalence of childhood obesity. The study also found that parents preferred to buy high-calorie, low-nutrient food for their kids because they believed their kids would like such kinds of food.
• Socioeconomic factors: The Centers for Disease Control and Prevention (CDC) states that a lack of access to public facilities increases the childhood obesity rate. About 40% of U.S households do not have full-service grocery stores within their communities. In this case, children are more likely to consume fast food and frozen food rather than fresh fruits and vegetables. More than half of U.S families do not have access to public infrastructures such as parks and playgrounds. Hence, children spend more time on sedentary activities (watching TV and playing video games), which negatively influences their health. 

Healthy, Hunger-Free Kids Act of 2010 (HHFKA)

Healthy, Hunger-Free Kids Act of 2010 (HHFKA) promotes low-income children’s access to nutritious food by authorizing financing for federal school lunch and child nutrition programs. The US Department of Agriculture (USDA) reports from 2012-2013 show that 21.5 million U.S students received free or reduced-price meals at school under the influence of the HHFKA. The main terms of the Healthy, Hunger-Free Kids Act of 2010 are as follows:

1. Implementing nutritional standards: The HHFKA enables the USDA to establish nutritional guidelines for any meals that are offered at schools, including products provided in vending machines and school stores. Schools receive funding to improve nutrient content in school lunch programs and the accessibility of drinking water. 
2. Expanding the beneficiary group: More than 115,000 students who satisfy income standards using Medicaid data are enrolled in the school lunch program. HHFKA increases meal plan access to students in low-income communities by simplifying eligibility criteria. At-risk students who are enrolled in after-school programs are also eligible for meal support. 
3. Increasing program professionalism: HHFKA requires a three-year cycle for school audits to monitor adherence to nutritional standards. Schools are required to provide transparent nutritional information on school meals to parents. HHFKA also provides school food service providers with instruction and technical support. 

According to Kenney et al.’s study, HHFKA impacted many students in poverty. The prevalence of childhood obesity among impoverished students began to decrease after implementing HHFKA at 9 percent each year. The obesity rate among non-impoverished students was no different during the study period. The study revealed that with the regulation of HHFKA, overall childhood obesity is rising more slowly than expected. 

Supplemental Nutrition Assistance Program (SNAP) and Other Childhood Obesity Federal Programs and Policies 

Supplemental Nutrition Assistance Program (SNAP), the largest nutrition program in the country, offers short-term financial assistance to people who are struggling to pay for food. More than 43 million individuals received help from SNAP in getting access to food and drinks to maintain a healthy and balanced diet. Additional federal policies and programs that help children in the U.S get access to nutritious food and reduce the food insecurity rate and obesity rates among them are listed below. 

• Child Nutrition Policies: Child nutrition policies vary from state to state, but their common goal is to reduce the food insecurity rate and provide children with nutritious food. Evidence shows that children’s food insecurity decreased by 33% half a year after their families received SNAP benefits. 
• The Child and Adult Care Food Program (CACFP): Childcare facilities and other programs that provide nutritious food for children and adults receive federal funding from CACFP for compensation. In one day, over 4.2 million children have access to nutritious meals and snacks each day through CACFP. 
• Dietary Guidelines: The first edition of the Dietary Guidelines for Americans (DGA) 2020-2025 provides nutritional recommendations for people at different life stages. The DGA recommends that children under two do not consume food and beverages with added sugar. The DGA also provides nutrition standards for federal nutrition programs and health policies. 
• Women, Infants, and Children (WIC) Program: WIC provides the same benefits as SNAP to a different population. WIC promotes breastfeeding and provides healthy foods and nutrition education to eligible pregnant, postpartum, and breastfeeding women, infants, and children under five years old with healthcare and social services to help them maintain a healthy weight. The obesity rate for children ages 2 to 4 years that receive WIC benefits reduced by 1.5% from 2010 to 2018. 

Challenges of SNAP 

Under a new USDA policy, only people who benefited from the Temporary Assistance for Needy Families (TANF) program are able to receive SNAP benefits. Because of that, more than 3 million people lost SNAP eligibility. SNAP is funded through block grants, which means the level of funding is set across a designated time period. This could pose a challenge if the SNAP-eligible population grew quickly, like during a recession. Eligibility standards vary state to state, so two SNAP participants who live in different states may receive different benefits even if they have the same circumstances. 

Benefits of SNAP 

SNAP reduces poverty and food insecurity, and improves children’s health, indirectly reducing the childhood obesity rate. Children in SNAP-eligible households gain access to nutritious food and drink, which helps them develop healthy eating habits. Children who participated in SNAP also have a decreased risk of developing high blood pressure, heart diseases, diabetes, and other health diseases across their lifetime

On March 23rd of 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act, a landmark U.S. statute that entails the largest regulatory overhaul and coverage expansion since the enactment of Medicare and Medicaid in the 1960s. Introduced at a time when over 45 million Americans were uninsured, the ACA constituted provisions that required most individuals to have health insurance at the cost of a penalty fee, combat abusive insurance practices, make coverage more easily accessible, and attempted to mitigate increasing healthcare costs. At the vantage point of over a decade since its passage, it’s worth taking a look back on its implications across Medicaid, private, and other sources of healthcare coverage.

Medicaid Expansion

In pre-ACA times, Medicaid was generally inaccessible to non-disabled adults under age 65 unless they had minor children. Henceforth, with the intention of attaining coverage for low-income Americans, the ACA called for all states to expand Medicaid coverage for adults up to age 64 with incomes at or below 138% of the federal poverty level (FPL). The federal government would cover 100% of the increased costs until 2016 and incrementally taper to 90% by 2020. 

Under the ACA, if states were to not participate in the Medicaid expansion, Congress was to invoke the Spending Clause to revoke all of their Medicaid funding. However, the Medicaid expansion was rendered optional after the 2012 Supreme Court ruling of NFIB vs. Sebelius, which deemed termination of all Medicaid funding to noncompliant states as unconstitutionally coercive. As of 2022, 38 states and the District of Columbia have implemented the Medicaid expansion. In the 12 states that have not enacted the initiative, there currently exists a coverage gap where 2.2 million people are eligible for neither premium subsidies in the Marketplace due to below-FPL income nor Medicaid. 

Marketplace Insurance Subsidies

Furthermore, for individuals without employer or government-funded insurance, the ACA provides subsidies in the private insurance marketplace. Before 2014, insurance companies practiced medical underwriting where they would evaluate whether to accept an applicant for coverage and at what premium rates if they do. Since individual insurance typically bares greater administrative costs than group policies, securing coverage used to be either too inaccessible or costly especially for patients with pre-existing conditions. 

Intending to remedy this phenomenon, the ACA provided premium subsidies for individuals with incomes at or below 400% of the FPL, where buyers would spend no more than a predetermined percentage of their income, ranging from 2.06% to 9.78% correlating to their income, on insurance. The cost of a plan that covered approximately 70% of the expected expenses for an insuree in a local insurance marketplace establishes the amount of the provided subsidy. Additionally, the ACA also mandated insurers to reduce copayment of deductible in the form of cost-sharing assistance for individuals making less than 250% of the FPL. Under this provision, a “moderately generous” plan can cover 94% of an insuree’s expected costs. 

Marketplace Reforms

Additionally, the ACA transformed the insurance market via a series of reforms targeted at specific existing problems. In establishing “guaranteed issue” and “guaranteed renewal”, the ACA ensured that insurers must accept all applicants at equal premiums regardless of a patient’s pre-existing conditions. Now, the only factors impacting a person’s premium are age, family size, geographical location, and smoking habits. In addition, the law required health plans in the individual and small group markets to cover ten essential health benefits (EHB) that include ambulatory services, emergency services, maternity, and newborn care, hospitalization, and more. 

Moreover, in foreseeing the potential of sicker individuals entering the insurance Marketplace due to installment of the guaranteed issue and driving up premiums, the ACA sought to incentivize the healthy population of purchasing insurance to balance out the risk pools. For that reason, the ACA imposed the controversial and now-repealed individual mandate, requiring all Americans to have purchased health insurance by 2014 or pay a financial penalty.

In perhaps its most popular provision known as the dependent-coverage policy, the ACA required all 

private insurers to offer coverage to dependent children to up 26 years of age on their parents’ plans. Effectuation of this provision concurred with the beginning of a steep decrease in the uninsured rate among the 19-25 years old demographic. At the highest uninsured rate of any group, 33.9% of adults younger than 26 years of age lacked coverage in 2010. By 2013, this percentage had fallen to 26.5% and eventually to a sub-15% in 2016 in the aftermath of the Medicaid expansion and Marketplace creation.

Basic Health Program (BHP)

Section 1331 of the ACA enables states to create a Basic Health Program (BHP), a health benefits coverage program that serves as an alternative to the Health Insurance Marketplace for low-income residents whose income fluctuates above and below Medicaid and Children’s Health Insurance (CHIP) levels. Since then, the program has been implemented in New York and Minnesota. Under this plan which will include at least the ten essential health benefits mandated by the ACA, monthly premium and cost-sharing charged to enrollees will not be greater than a qualified health plan (QHP) Marketplace alternative. 

Effects on Coverage Expansion

In the metric of expanding coverage in the US, the ACA was largely successful. According to a 2019 US Department of Health and Human Services (HHS) report, enrollment data from late 2020 and early 2021 indicates that approximately 31 million persons gained coverage related to ACA provisions. 

The breakdown is as follows:

• 11.3 million Marketplace plan enrollees as of February 2021
• 14.8 million new Medicaid enrollees due to eligibility expansion as of December 2020
• 1 million persons enrolled in ACA’s Basic Health Program
• Close to 4 million persons, known as the “woodwork group”, who had been eligible but previously weren’t covered, are now incentivized to take up Medicaid due to heightened awareness of ACA’s coverage options, reduced administrative barriers to applying, and the individual mandate.

Acting in tandem with cost-sharing reductions, premium subsidies have substantially decreased premiums and deductibles for those in the lower-income range. In 2019, 87% of the 10.6 million Marketplace plan enrollees benefited from such premium subsidies. Furthermore, in a 2017 study published in the Journal of Health Economics, researchers accredited 40% of the coverage gains to these exchange premium subsidies. However, enrollments, on an annualized basis, since 2015 have been consistently hovering around 10 million persons, which is 60% below previous Congressional Budget Office (CBO) projections. Moreover, in guaranteeing lower- and middle-income employees access to individual market plans with premium tax credits, the ACA had inadvertently prompted 2 million workers to be dropped from their existing employer-sponsored insurance by 2017.

Deviations from ACA’s Design

However, the full effects of the Medicaid expansion couldn’t be realized partially due to the coverage gap previously discussed, but also due to Section 1115 waivers issued by President Trump’s administration. Section 1115 of the Social Security Act allows states to impose premiums and increase cost-sharing among new requirements on Medicaid expansion enrollees. In 2018, based on benefiting state governments “in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement”, the Trump administration approved work requirements of between 80 and 120 hours a month in 13 states. Limited data is available on the coverage loss of these Section 1115 waivers. However, in the case of Arkansas where the waiver was active from June 2018 to March 2019, over 18,000 people, or roughly 25% of those subjected to the work requirement, many of whom were working but were unaware of how to report to Medicaid authorities, were disenrolled from Medicaid after failing to comply. Henceforth, though not a direct intention by the ACA’s crafters, opponents of the ACA have criticized it for being subject to turbulences of the “big government”. 

Additionally, the repeal of the individual mandate in December of 2017 is expected to disincentivize healthier people from acquiring coverage in the Marketplace and drive up premium prices. In a comparison of pre- and post-repeal insurance levels, research has found a 24% increase in the likelihood of becoming newly uninsured in states with no federal or state mandate.

What’s Next?

Under the American Rescue Plan of 2021 (ARP), households above the 400 percent FBL received premium tax credits to improve affordability in the Marketplace. The ARP had increased access to zero-premium plans on the federal healthcare marketplace from 43 percent to 62 percent of uninsured non-elderly adults, as well as access to low-cost plans (under $50 monthly premium) from 57 percent to 73 percent. By the end of the 2022 Open Enrollment Period, Marketplace enrollment had reached an all-time high of 14.5 million people. However, if not extended, the expansion provision is set to expire in 2023. A recent HHS report projects that 3 million current insurees, 15% of the individual market population, will become uninsured in that scenario. 

Introduction

When the Medicare program was first implemented in 1965 to provide subsidized health coverage for the elderly and disabled, it encompassed inpatient hospital stays and outpatient physician office visits via Medicare’s Part A and Part B, respectively. However, the program didn’t cover self-administered retail prescription drugs, which have long consisted of the largest share of prescription drug use. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, signed into law in 2003 and effectuating in 2006, created an optional outpatient prescription drug benefit program called Medicare Part D or Medicare Rx to help pay for drugs at retail, mail order, home infusion, and long-term care pharmacies. By 2021, 48 million out of the over 62 million Medicare beneficiaries are enrolled in Part D plans.

In 2018, Part D’s program expenditures reached $95.4 billion, or nearly 13% of total Medicare spending. Part D constitutes more than one-third of retail prescription drug spending in the US. It’s financed primarily by general revenues (71%), beneficiary premiums (17%), and state payments for beneficiaries eligible for both Medicare and Medicaid (12%). 

Types of Medicare Part D Plans

Differing from Parts A and B, which are publicly administered by Medicare, Part D is provided by authorized Medicare-contracted private insurers. These companies are subject to Medicare regulations and subsidization, pursuant to one-year, annually renewed terms. There are two main types of plans beneficiaries can enroll in for Part D benefits. 

1. Prescription Drug Plan (PDP): a standalone plan that covers solely prescription drugs. 
2. Medicare Advantage Prescription Drug Plan (MA-PD): combines a beneficiary’s doctor, hospital, and prescription drug coverages under one policy. Additionally, employers and unions can extend the Part D coverage from their own MA-PD plans to Medicare-eligible employees and retirees in what’s known as Employer or Union Sponsored Part D Retiree Plans.

Generally, an individual must have either Part A OR Part B coverage to enroll in a PDP, while he/she would need both Part A AND Part B to enroll in an MA-PD. PDPs tend to be nationwide plans, while MA-PDs have more restricted regions, whether by state or by counties within states. Therefore, MA-PDs aren’t recommended for those who travel extensively or reside in various areas of the country throughout the year. 

PDP plans also differ from MA-PDs because with PDP plans, beneficiaries’ costs are directly related to the anticipated prescription drug spending of the population. Additionally, PDPs are dictated by costs within the retail drug sector, therefore fluctuations in healthcare costs in other respects such as hospitalization don’t impact PDPs. 

Costs of Medicare Part D

Part D operates on an insurance model where enrollees are charged costs typically associated with standard insurance plans, such as monthly premiums, annual deductibles, and copays. In 2022, Medicare Part D coverage costs on average $33 per month, while Medicare Advantage plans will cost $19 per month. 

Covered Drugs

Part D plans aren’t required to cover all Part D drugs. Instead they establish their own formularies, with varying tiers associated with accordingly set copay amounts across the categories of drugs. Lower tiers tend to have lower copays. A formulary must follow the model formulary in the US Pharmacopeia, include at least 2 drugs in each of the 148 drug categories, and covers all or “substantially all” drugs under the categories of anti-cancer; antipsychotic; anti-convulsant, antidepressants, immuno-suppressant, and antiretroviral drugs.

The Standard Benefit

The law mandates companies to offer a “standard benefit” package at the minimum, including an annual deductible and a coverage gap, known as the “Donut Hole”. While some plans may deviate from the standard benefit in terms of structure, they must be actuarially equivalent. Occasionally, “enhanced” plans may provide more benefits than the baseline set by the “standard benefit”, including more coverage during the Donut Hole period. The section below outlines the Part D standard benefit phases for 2022.

1. Deductible Phase: Enrollees pay for the full cost of his/her prescription drug until he/she reaches the initial Annual Deductible of $480.
2. Initial Coverage: The beneficiary would go on to pay 25% of a covered Part D prescription drug, either a copayment (a set amount) or coinsurance (a percentage of the drug’s cost). This amount will depend on the drug’s designated tier. This stage ends when a beneficiary and his/her insurer reach the initial coverage limit of $4,430, or when the beneficiary has paid $1107.50.
3. Coverage Gap: Prior to 2019, upon the plan and enrollee collectively reaching the initial coverage limit, the enrollee enters the “Donut Hole” phase, where the enrollee would be required to pay a higher percentage of the drug’s full cost than the 25% of the previous phase. The Health Care and Education Reconciliation Act of 2010 (HCERA) established a gradual phase-out of the coverage gap by 2020. With the Bipartisan Budget Act of 2018 (BBA), the Donut Hole for brand-name drugs closed one year ahead. In 2022, enrollees on the standard drug plan will pay 25% coinsurance for both brand name and generic drugs until their true out-of-pocket cost (TrOOP) reaches the catastrophic coverage minimum. The 75% discount on brand-name drugs is 70% paid by the drug manufacturer and 5% by the Part D plan. The TrOOP is calculated by adding together the yearly deductible, coinsurance, and copayments from the entire plan year, and beneficiary contributions during the coverage gap including the 70% Donut Hole manufacturer discount.
4. Catastrophic Coverage: Once a beneficiary’s TrOOP amounts to $7,050, he/she will pay the greater amount between either 5% of drug costs or $3.70 for generics and $9.20 for brand names. For the remaining costs, roughly 95% of the total, 80% will be covered by Medicare and 15% by the plan. The enrollee will remain in this phase until the end of the plan year before it resets in the new year. 

Pros of Medicare Part D

By design, different coverage costs for according “tiers” of drugs are meant to protect consumers from high-cost prescription drugs. At low premiums and a plethora of options, consumers have a wide range of choices depending on their needs and how Part D works alongside their other concurrent coverage plans. 

Studies have observed the percentage of Medicare beneficiaries forgoing medications due to cost dropped from 15.2% in 2004 to 11.5% in 2006 post-enactment of Part D. A 2020 study also found that Part D led to a sharp reduction in the number of full-time workers older than 65.

Cons of Medicare Part D

Medicare enables Part D coverage enrollment around the time of a person’s 65th birthday. However, if a Medicare enrollee goes without Part D or other creditable prescription drug coverage for any continuous interlude of 63 days or more after the end of their Part D Initial Enrollment Period, they are subjected to a late enrollment penalty. The penalty is typically added to the person’s monthly premium amount and its amount increases with how long he/she has gone uninsured. For each full, uncovered month that the enrollee didn’t have Medicare drug coverage or other creditable coverage, 1% of the “national base beneficiary premium” (or the base beneficiary premium) will be added to his/her monthly premium. 

Given Part D’s formulary structure, a potential enrollee would need to anticipate his/her drug needs for the upcoming plan year and have to shop between various plans on the market. Further, due to plans differing from insurer to insurer other than a Medicare-mandated minimum amount of coverage, this gives enrollees another reason to ensure a particular plan satisfies all drug needs.

Another key criticism regarding Part D is the “Noninterference Clause”, which prevents Medicare from negotiating Part D prices with drug companies in hopes that private insurers are incentivized to negotiate the lowest possible drug prices. However, since not even the largest insurers have enough enrollee base as leverage, Part D drug prices are largely not negotiated, leading to spending $50 billion a year in the “most conservative high-cost scenario” that otherwise could have been saved between 2006 and 2013. 

Medicare Part D in the News

At a time when reining in drug prices has overwhelming public support in the US, the current Senate’s Democratic majority recently reached a deal allowing Medicare to negotiate and place caps on drug price inflation. The crux of the legislation is the negotiation provisions. If passed, Medicare could start the Drug Price Negotiation Program (DPNP) in 2023, with the secretary of the Department of Health and Human Services selecting up to 10 drugs to negotiate prices on, with the negotiated prices effectuating in 2026. In 2029, the number of drugs subjected to bargaining will increase to 20. Furthermore, the legislation will create a $2,000 out-of-pocket spending cap for Part D beneficiaries, prohibiting brand-name manufacturers from hindering competition from generic-drug producing counterparts and requiring companies to pay a rebate for hiking drug prices beyond the rate of inflation. Over the next decade, this plan is projected to save $288 billion.

Who was Ryan White?

Ryan White was a boy in Indiana who contracted HIV after a blood transfusion at the age of 13. Ryan experienced discrimination at school and had to fight to be allowed to attend. He passed away in April 1990, a month before he graduated high school. Prior to Ryan White, HIV/AIDS was largely seen as a problem restricted only to the gay community, and policymakers gave little attention to the crisis. Ryan White’s case challenged the dominant narrative at the time that the members of the LGBTQ+ community were the only ones at risk from the virus, and addressing the pandemic became a priority when it became clear that HIV/AIDS could affect anyone.

The Ryan White Comprehensive AIDS Resources Emergency Act

On August 18th, 1990, Congress enacted the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act—the legislation that made the Ryan White Program—to increase the availability and quality of HIV treatment and care for people who have HIV and are of low-income. The Ryan White (CARE) Act was amended and reauthorized in 1996, 2000, and 2006. In 2009, it was reauthorized as the Ryan White HIV/AIDS Treatment Extension Act of 2009 (Public Law 111–87).

The Ryan White HIV/AIDS Program is the largest federal program specifically supporting people living with HIV in the United States, contributing to improvements in disease morbidity and life expectancy. The program gives support services and outpatient care to people and families that have been affected by the disease. It is administered by the HIV/AIDS Bureau (HAB) at the Health Resources and Services Administration (HRSA) of the Department for Health and Human Services (HHS), and services and programs are provided by sub-grantees and grantees at the local and state levels. In 2019, the federal government launched Ending the HIV Epidemic, which aims to lessen new HIV infection by 75% in five years and 90% in ten years. The Ryan White Program, and the HRSA which administers it, leads these efforts.

The Ryan White Program Clients

In 2019, The Ryan White Program gave services to around 568,000 people—more than half of all who have been diagnosed with HIV in the U.S. 88.1% of clients in 2019 achieved viral suppression, meaning they had fewer than 200 duplicates of HIV per milliliter of blood. This marked an improvement from the 69.5% that achieved viral suppression in 2010. In 2019, almost ¾ of Ryan White Program clients were from ethnic/racial minority populations:

• 46.6% Black/African American 
• 23.3% Hispanic/Latino. 

In that same year, 71.6% of clients were male, 26.2% were female, and 2.3% were transgender. 60.7% of Ryan White Program clients were living at or below the federal poverty level.

The Ryan White Program Parts

The Ryan White Program consists of five Parts that fund for medications, clinical training, support and medical services, technical assistance and the development and distribution of new HIV care strategies:

• Part A funds support and medical services to Eligible Metropolitan Areas (EMAs) and Transitional Grant Areas (TGAs), which are cities and counties that the HIV epidemic has affected the most. About 72% of all HIV-diagnosed people in the U.S. live in EMAs and TGAs.
• Part B gives funding to states and territories to improve the availability, quality, and organization of HIV support services and health care. All 50 states are recipients, as well as the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, Republic of Palau, Republic of the Marshalls Islands, Commonwealth of the Northern Mariana Islands, and Federated States of Micronesia.
• Part C gives funds to local, community-based organizations so that they can provide full-scale essential HIV support services and medical care in an outpatient setting for people who have HIV. Part C also funds Capacity Development grants, which assist organizations in more successfully delivering HIV services and care.
• Part D gives funds to local, community-based organizations so that they can provide ambulatory, outpatient, family-oriented primary and specialty care for infants, kids, youth, and women with HIV.
• Part F funds support clinician training, technical support, and the development of new HIV care strategies to better health outcomes and lessen HIV transmission. These programs include-
  • The AIDS Education and Training Centers (AETC) Program
  • The Special Projects of National Significance (SPNS) Program
  • The Minority AIDS Initiative

Two Part F programs center on funding oral health care for people who have HIV:

• The HIV/AIDS Dental Reimbursement Program (DRP)
• The Community-Based Dental Partnership Program

Pros of the Ryan White Program

Half a million Americans who live with HIV/AIDS are alive and well due in part to the resources that the Ryan White Program provides. More than thirty years after its inception, it is still the only federal program that has wide bipartisan support and is funded at $2.38 billion. The program recently received $90 million to address new COVID-19 issues in people who have HIV/AIDS.

Cons of the Ryan White Program

There are disagreements about the most effective distribution of funding. Currently, greater funding is allocated to cities that have the highest number of HIV cases. One of the highest risk demographics for HIV is incarcerated individuals. Therefore, cities that have large prisons tend to have the largest number of HIV positive individuals. Critics of the Ryan White Program argue that funding should be distributed in a manner that most benefits law abiding citizens suffering from the disease, which ultimately prioritizes certain demographics over others as opposed to relying solely on the number of HIV cases to determine funding. 

Another source of contention is whether municipal or state governments should receive the funding allocated by the program. Large metropolitan areas with high HIV burdens benefit most when cities are funded. This is the common scenario in most northern states. However, in southern states the distribution of HIV cases is often highest in rural areas. In this scenario, it’s more beneficial for states to receive the funding as opposed to cities, since the HIV cases aren’t congested in one small area.