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Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

By |2018-01-03T21:04:29+00:00January 3rd, 2018|Health Reform, Innovation, Reimbursement, Uncategorized, What do we pay for and why|

Innovation Series: Gene Therapy

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

From gene therapy to a “pen” that can detect cancerous tissue in 10 seconds, we live in a time of amazing scientific breakthroughs. Advances in technology and our understanding of the genetic basis of disease are resulting in a range of innovations that hold the promise of improving our approaches to treatment – including things like new treatment options for rare diseases and improving the likelihood of success of something like cancer surgery. As we kick off 2018, I wonder what great new innovations the year will bring?

As just one example of innovation, consider the field of gene therapy: early last year the FDA approved the first gene therapy, Novartis’ Kymriah (tisagenlecleucel)‎, bringing “hope to the 3,100 people under the age of 20 in the United States who are diagnosed each year with acute lymphoblastic leukemia,” as the pharmacy benefit manager (PBM) Express Scripts describes in a recent post on its web site. Kymriah is “customized for each individual, using genetically modified versions of the patient’s own immune cells to target and kill leukemia cells.”

Gene therapies “are administered once, unlike nearly all other medications that are repeatedly taken over time,” Express Scripts notes. “And therein lies the challenge.”

The promise of gene therapy comes with a “dramatically higher price;” for example, Kymriah is priced at $475,000. Not only is this price significantly higher than more traditional types of drugs – it’s also much higher than other specialty drugs, the PBM says.

Paying for these types of breakthroughs will present challenges. “Pharmaceutical companies have a single opportunity per patient to get paid,” and “many gene therapies target extremely rare diseases, so there aren’t many patients to share the cost drug makers require to justify the expense of research, development and commercialization. The result is very high price tags,” Express Scripts says.

“The health care system isn’t set up for this type of economic model. Thus, making these therapies available to patients “requires novel collaboration,” the company says. A “new payment model” is needed, and Express Scripts is working with drug companies, policymakers, patient groups and payers on “innovative approaches to make gene therapies accessible for patients.”

For example, value-based contracting can “ensure that payers and patients aren’t on the hook when a treatment isn’t effective. Consultations involving pharma companies and payers can help set appropriate prices.” And “discussions with policymakers can help set an appropriate regulatory framework.”

“Ultimately…gene therapies will require payment and patient care systems which are as novel as the medications themselves,” Express Scripts says. “Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments. A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.”

What do all of these new and potentially lifesaving innovations mean for the health care system? As with any innovation that offers new hope for patients, there will likely be high demand, but that will have to be considered in the context of limited resources. We are witnessing significant new innovations and scientific advancement; the usual questions of access and how to pay for it will be dramatically amplified in this modern era, given the unprecedented price tags. Particularly in the case of gene therapy, this may require new types of conversations and collaborations between drug developers, payers and patients, along with new payment approaches.

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Health Care and the Tax Bill: ICYMI

By |2017-12-21T10:45:42+00:00December 20th, 2017|Health Care Trends, Uncategorized|

Health Care and the Tax Bill: ICYMI

The Tax Cuts and Jobs Act signed by President Trump December 20, 2017, The Wall Street Journal called “the most sweeping changes to the tax code in more than 30 years.” Tax policy is not my expertise, but we do love policy in general at M2, so this blog highlights some of the best pieces we have read so far on what the tax bill may mean for various parts of the health care system.

For a quick, but thoughtful primer, read Paige Winfield Cunningham’s The Health 202: It’s a happy holiday for medical tax breaks, but not Obamacare’s individual mandate. Cunningham gives a snapshot of health care interests including patients, hospitals, health systems, insurers, pharma companies, and academic medical centers.

Over at HealthcareDIVE, Shannon Muchmore provides a bit deeper dive on the bill’s effects across the health care industry. Steven Porter at HealthLeadersMedia also covers some technical provisions important to various industries that you might not have read about.

Brian Bowden blogged for The National Association of Counties before the final bill, but his take is still useful in thinking about how various provisions of the tax bill affect health care delivery at the county level.

As always, an excellent, deep analysis is provided by Health Affairs. Timothy Jost posted The Tax Bill and The Individual Mandate: What Happened, And What Does It Mean? and included this under-reported tidbit: “…the repeal of the individual mandate penalty will not by any means bring an end to the ACA. The numbers who lose coverage will likely be much smaller than the CBO estimates. S&P Global estimates that it is more likely that three to five million will lose coverage by 2027. The Medicaid expansions, which have accounted for a majority of the ACA’s coverage of the uninsured, will continue.”

(The short S&P piece is worth a read too. Click through!)

To close out, if you are dying to know about S Corps and “pass-through” entities, and what that has to do with the health care world, read through this well-rounded piece by Harris Meyer at Modern Healthcare. He covers how hospital systems might restructure employment agreements with providers and whether the new tax cut for small business might address access in rural areas.

We hope you learn something new from reading these pieces – we certainly did. Of course, feel free to let us know about any articles you think shed new light on health care and the tax bill.

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Insurer Bargaining Power: Markets With High Insurer Concentration and High Provider Concentration Show Decreased Hospital, Physician Fees – Health Affairs Study

By |2017-12-14T02:47:07+00:00December 13th, 2017|Health care spending, Hospitals, Insurance, Out-of-pocket spending, Uncategorized|

Insurer Bargaining Power: Markets With High Insurer Concentration and High Provider Concentration Show Decreased Hospital, Physician Fees – Health Affairs Study

In a recently published study in Health Affairs, the authors set out to determine whether insurers had the bargaining power to reduce prices for hospital admissions and physician visits (among five types of physicians).

The results confirm what the authors, had anticipated – that insurer bargaining power is strongest in markets with both high provider concentration and high insurer concentration.

The authors found that in markets where both insurers and providers were highly concentrated, insurers were able to reduce hospital admissions prices by 5%, and were able to reduce physician visit prices as well – e.g., cardiologist, radiologist and hematologist/oncologist visit prices were reduced by 4%, 7%, and 19%, respectively.

However, the study did not find evidence of insurer bargaining power on prices of visits to primary care physicians or orthopedists.  This lack of effect is “likely because prices for those specialties are not far out of line, so it’s very hard for payers to negotiate from a price that is not far out of competitive range,” according to comments made by study one of the study’s authors, Richard Scheffler, University of California, Berkeley, in a Medscape Medical News article (Scheffler co-authored the study with fellow UC-Berkeley health economist Daniel Arnold).

Conversely, the authors found that insurer bargaining power in markets with low provider concentration was not significant, because providers in those markets are already near the competitive level, thus leaving very little room for downward negotiation of prices.

The study examined the association between provider and insurer market concentration and provider prices, calculated from the Health Care Cost Institute’s medical claims database, from 2010 to 2014. Measures of market concentration were computed using the Herfindahl-Hirschman Index (HHI), a common measure of market competitiveness used in the Horizontal Merger Guidelines of the Department of Justice (DOJ) and Federal Trade Commission (FTC).

The authors note the rapid pace of consolidation of hospitals; from 1998 to 2015, there were over 1,400 hospital mergers in the U.S., 40% of which occurred between 2010 and 2015. Similarly, physician markets are also becoming concentrated “at an accelerated pace, with primary care physicians making the move from smaller to larger group practices faster than specialists.”

“The increased consolidation of provider (hospital and physician) markets and health insurance markets has garnered significant attention and led to calls for policy action to maintain and enhance the competitiveness of health care markets,” they note.

“Our results…suggest that insurers can bargain the prices down in highly concentrated provider markets,” the authors conclude.

However, “what is missing is a market mechanism that will pass these reduced prices on to consumers in the form of lower insurance premiums,” the authors note.

“Given the extreme concentration of the health insurer market, it is hard to imagine that many markets will be contestable and that competition will work to reduce premiums. Significant premium increases and the profits of the health insurance industry in recent years suggest that little if any of the benefits of insurer bargaining power are being passed along to consumers,” Scheffler and Arnold say. Nonetheless, “in the ACA Marketplaces, there is evidence that active-purchaser states are able to keep premiums down and stabilize their markets,” they note.

Overall, aside from insurers in some of the Affordable Care Act exchanges, insurers “are making a huge amount of money,” Scheffler says in the Medscape article. With market concentration, “medicine doesn’t improve, the quality doesn’t get any better, consumers don’t benefit, but the insurance companies’ stock prices go up.”

Thus, “it would seem to be only a matter of time before further intervention in and regulation of the health insurance market by state and federal legislatures, as well as private market innovation will accelerate.”

In the Medscape article, Scheffler proposes three potential avenues for change: First, the Federal Trade Commission should get more involved in investigating the pricing practices of highly concentrated markets. Second, states should more aggressively regulate premiums that insurance companies charge and ensure that savings are passed on to consumers. Third, large companies could bypass insurers and self-insure.

Hoping for increased competition in the insurance market is unlikely to be a fruitful option here, in light of increasing consolidation; as the authors rightly point out, other measures will be needed in order to bring relief to consumers. In particular, states should follow the lead of those that have moved to more aggressively regulate insurance premiums and ensure that savings resulting from increased bargaining power are passed on to consumers. Sky-high premiums continue to burden consumers; it’s time to hold insurers’ feet to the fire and make sure consumers aren’t the only ones still paying inflated prices.

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ICYMI: The CVS-Aetna Proposed Merger Could be Public Health Rocket Fuel

By |2017-12-07T01:22:04+00:00December 6th, 2017|Health Care Trends, Health Disparities, Insurance, Public Health, Retail Health, Social Determinants of Health, Uncategorized|

ICYMI: The CVS-Aetna Proposed Merger Could be Public Health Rocket Fuel

Sunday, December 3, CVS Health announced it will acquire health insurer Aetna for $69 billion. Lowering the cost of care by enabling a broader range of treatment in retail clinic settings, of which CVS Health has more than 1,100 in 33 states, is one of the obvious rationales of the combination. But what struck me in the comments of the merging companies’ CEOs was how much they sound like public health professors. Social determinants of health? Health as a path to fulfillment? What have they done with the business people? In case you missed it…

Mark Bertolini Really Cares About the Whole Person

Aetna Chairman and CEO Mark T. Bertolini has been talking publicly for quite some time about the importance of thinking about people not as patients, but more holistically. In September, in an interview with Dennis Berman, the Wall Street Journal financial editor, he said, “We believe the only way to truly disrupt the cost of health care … is to go into the homes and meet the social determinants that are now driving as much as 60 percent of life expectancy of Americans.”

What Bertolini has had to say now that the merger is official is straight-up public health speak. On CNBC Monday morning, when explaining the vision of the merger, Bertolini sounded like a philosopher: “Most people,” he explained, “find their health is a barrier to the life they want to live.” Indeed.

Larry Merlo is Fixated on Unmet Need

Larry J. Merlo, President and CEO of CVS Health, reminded anyone who was paying attention something that we in public health have known for a long time, but surprised the CNBC reporters, “You look at chronic disease in this country today, about half of all Americans have at least one of those chronic diseases. It’s accounting for 80% of the health care costs.”

Merlo further explains, “there’s billions of dollars every year on unnecessary and avoidable spending because people are not following…care plans.” Merlo’s solution, to be executed in part with the announced merger, is to address the unmet need the traditional health care system is creating, but CVS Health knows first-hand because patients come through its doors with health care needs that aren’t being met.

We “lack the element of convenience and coordination…that is the unmet need we are talking about,” says Merlo.

We Are All Public Health

As a public health student, educator and professional, I am public health. This merger discussion shows we are all public health. Georges C. Benjamin, M.D. Executive Director, American Public Health Association wrote in 2015, “Today, the biggest threats to the health and longevity of Americans are preventable diseases. These are the diseases that are burying us in preventable suffering, as well as crippling our communities with mountains of avoidable medical bills. The root causes of many of these health threats are inextricably linked to the social determinants of health and the conditions that shape a person’s opportunity to attain good health and adopt healthy behaviors. These social determinants include access to safe housing, good jobs with living wages, quality education, affordable health care, nutritious foods, and safe places to be physically active. They also include racism, discrimination, and bias.”

To see such similar language from Mark Bertolini and Larry Merlo in the CVS-Aetna merger discussion to date shows that the leaders of what could become the largest health care company in the U.S. are thinking differently about the broken U.S. health care system. Near the end of the investor call about the merger, an analyst asked whether the combined entity planned to be a person’s primary care physician. Bertolini answered: “The real important part here is that you have to understand that almost 60% of Americans don’t have a regular doctor.”

When you connect these dots, you can really see the big picture come together. The CVS-AET vision is bigger than managing the pharmacy benefit.

Will it work? Hard to say at this early stage. Should consumers want it to work? Absolutely. A health care company with a public health lens that focuses on health well before a person shows up at the doctor and prioritizes convenience, coordination, and social determinants of health would be a welcome change for individuals, families, and employers. Score one for public health.

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Policy Making from a Chinese Menu

By |2017-11-28T01:59:48+00:00November 27th, 2017|Health care spending, Health Reform, Uncategorized, What do we pay for and why|

Policy Making from a Chinese Menu

The dueling Congressional tax plans are the latest exhibit in policy making by Chinese menu. Instead of thinking through issues and starting with the core question of: What problem are we trying to solve? –both the House and Senate have engaged in choosing their favorite items from a menu with no coherent point of view about why those singular items might come together to form a whole policy.

Merriam-Webster dictionary defines policy as “a definite course or method of action selected from among alternatives and in light of given conditions to guide and determine present and future decisions.” Choosing eggrolls, spicy kung pao chicken, house fried rice, and vegetable lo-mein for dinner is a definite course of action from among alternatives in light of the given condition that you are hungry. It might even guide future decisions not to have Chinese food for a couple days because you are ready to move on to steak or spaghetti.

I was formally trained in philosophy and debate. Clients engage my firm to think through policy issues. I’m essentially paid to argue, but not like a lawyer, more like a philosopher. We are well aware of the trade-offs policy decisions entail. Argumentation is the art of thinking through those trade-offs. The stasis theory is ingrained in my thinking and approach to issues, even now as I work with corporate clients on business issues and run my own business. Developed by the Ancient Greeks, honed by the Romans, and used for centuries hence, the four core questions of stasis theory are those most of us were taught regarding how to think about problems.

When faced with an issue, we ask: First, what are the facts, or, is there really a problem? Second, what kind of problem is it? Third, how serious is this problem, who is affected, what are the costs of solving the problem? Fourth, and finally, we ask, should we take action, who should we include in solving the problem, and what needs to happen to solve the problem?

As you can see with the fourth question, policy questions often begin with a “should” – at least in concept. Should local tax dollars be used to build parks? Should individuals be required to have automobile insurance? How should free speech be weighed against public safety? There is a method being used to determine present and future decisions. Stepping through the core questions of the stasis theory helps us as individuals, communities, and as a society think about alternatives to solving a problem, and be clear-minded about what we are not choosing, as much as what we are choosing to do.

When the government is involved, it is essential that reasoning for choices is clear. Lawrence O. Gostin, a Professor at Georgetown Law, explains, “government should justify interventions because, almost invariably, they intrude on individual rights and interests and incur economic costs.”

Commentators and tax experts are writing and speaking about the winners and losers in the tax cut passed by the House this week and the Senate bill under consideration, so if you are following the issue, you have a pretty good idea of what is in the proposals. What we have very little idea of is why. Is there really a problem? What kind of problem is it?

Will lowering the corporate tax rate for large companies fix this problem? Will raising the tax rate for small businesses who are accountants, dentists, or consultants fix this problem? Is raising the deficit an acceptable cost of solving the problem?

During this holiday season, as families and friends gather, I would ask anyone who is willing to engage in a discussion that asks as many of the four questions above as possible. Like the health bills that passed, but eventually failed to become law earlier this year, the tax proposals before us are a result of Chinese menu-style policy making. A definite course of action is being selected, but without much input or thoughtfulness about what problems we are trying to solve, the costs of solving the problem, and whether the solutions will actually work.

If we want coherent policy, that is, policy that addresses a clearly defined problem and is likely to produce the desired outcome, we need to discuss amongst ourselves, and then engage with our representatives. We elected them but they still need to know how we want them to solve these problems. Discuss, argue, engage – better policy is on us.

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M2 is Thankful!

By |2017-11-22T20:40:09+00:00November 22nd, 2017|Uncategorized|

M2 is Thankful!

As the Thanksgiving holiday approaches, M2 is thankful for clients, friends, followers, family, and, for the opportunities we are given every day to make constructive changes to the way health care is delivered and paid for in states across the US.

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Anthem Steers Members Away from Hospitals for MRIs, CT Scans, in Favor of Freestanding Facilities

By |2017-11-12T22:41:42+00:00November 10th, 2017|Health care spending, Hospitals, Insurance, Uncategorized, What do we pay for and why|

Anthem Steers Members Away from Hospitals for MRIs, CT Scans, in Favor of Freestanding Facilities

Anthem is expanding its recently launched program that cuts hospital outpatient payments for MRIs and CT scans in order to steer patients toward freestanding facilities that provide these imaging services at lower cost. The program began in July with four states, and is now growing to include a total of nine states, including Colorado, New York, and Ohio.

Under its Imaging Clinical Site of Care program, Anthem no longer pays hospitals in the affected states for outpatient imaging services for MRIs or CT scans. Imaging is a large part of hospital revenue, and Anthem said it costs more to have the service done in a hospital outpatient setting than at a freestanding facility, according to a recent article in Healthcare Finance.

According to Anthem, imaging services can be just as safely provided in a lower cost, free-standing center as in a hospital outpatient setting. The cost for MRIs and CT scans can vary from $350 to $2,000 as Anthem noted when it began educating members about their options related to imaging services in 2010.

Anthem is willing to share the cost-savings with its members. In cases where it is not medically necessary to receive services from a hospital, consumers who go to a freestanding facility can save close to $1,000 out-of-pocket for some imaging services for those who have not met their deductible, and up to $200 for those whose plans require only a copay, the article notes, based on Anthem data.

Helping patients understand cost differences and sharing savings from changing the site of care is important as a recent report in Health Affairs, notes many consumers do not make any attempt to compare prices for health care services. “Most survey respondents said they didn’t comparison shop or even ask how much they would owe in copayments or other cost-sharing expenses before they turned up for an appointment.”

With a large insurer such as Anthem leading the way, other private insurers may follow suit on reimbursement for imaging services. “Hospitals need to recognize they are competing in a market already delivering on convenience, quality and affordability,” Anthem spokesperson Lori McLaughlin said.

Similar moves have been made on the public payer side as well.

Under Medicare, procedures performed in the hospital outpatient department are paid at a higher rate under the hospital outpatient prospective payment system compared to freestanding clinics, which are paid on the Medicare physician fee schedule. In July 2017, the Centers for Medicare & Medicaid (CMS) said it plans to continue implementing reductions to the outpatient prospective payment system spending in CY 2018, as it had begun in CY 2017. CMS estimated it would save approximately $500 million in 2017 by reimbursing services provided at certain outpatient provider-based departments at 50% of the Outpatient Prospective Payment System; this percentage is proposed to change to 25% in CY 2018.

This is a great example of the kind of approach that’s needed to lower health care costs. As I’ve noted in prior blogs (for example, here), we get what we pay for. If we want to move the needle on costs, we need a lot more of this type of approach, incentivizing patients to take advantage of lower cost, high quality alternatives to the way things have traditionally been done.

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Employers sending patients to top-performing providers with bargain prices for routine surgeries

By |2017-11-01T19:11:22+00:00October 31st, 2017|Health care spending, Hospitals, Uncategorized, What do we pay for and why|

Employers sending patients to top-performing providers with bargain prices for routine surgeries

In the face of high hospital bills, lack of local competition, and wild variations in surgical costs among different providers, some employers are responding by steering patients toward high-quality, bargain-priced providers. While this is happening primarily among some large private employers, a “handful” of public employers are also taking these steps, according to a recent article in Kaiser Health News.

Employers are striking deals for bundled payments for routine surgeries, with one fixed price covering tests, physician fees, and hospital charges; in some cases, the best-quality, lowest-cost provider is out of town. In addition, the providers are on the hook financially if any complications arise, the article notes.

Cost is not the only factor; the company also makes its choices based on quality, including data on complications and readmissions. “Not all surgeons are equal,” Carrum CEO Sachin Jain says in the article.

As an example, the article notes that Santa Barbara County is among about 400 employers on the west coast working with Carrum Health, a company that negotiates the bundled prices.

While the Santa Barbara County bundled payment program is voluntary for covered employees, the county has saved “nearly 50 percent on four surgery cases” since starting its program last year, the article says.

The article profiles one patient who received an all-expenses-paid trip to a luxury resort, over a thousand dollars in spending money, and a personal concierge during her stay in San Diego. The county provides further incentives to covered employees to participate in the program by waiving copays and deductibles.

However, “it was money well spent,” the article notes. Sending the patient 250 miles away for knee replacement surgery saved Santa Barbara County $30,000.  

“If that doesn’t speak to the inefficiencies in our health care system, I don’t know what does,” Andreas Pyper, assistant director of human resources for Santa Barbara County, says in the piece. “It’s almost like buying a Toyota Corolla for $50,000 and then going to San Diego to buy the same Corolla for $16,000. How long would the more expensive Toyota dealership last?”

Some companies have gone so far as to send patients overseas for cheaper care, but most employers favor a more regional approach, according to the article. Local physicians are still relied upon for follow-up care.

For some hospitals, the advantages of offering deep discounts include that “they get patients they otherwise would never see and are paid in full right after the patient is discharged, avoiding the onerous billing and collections process,” the article says.

Some hospitals also have the financial capacity to offer such sharply reduced prices; “most hospitals significantly mark up their commercial rates for orthopedic procedures and cardiac surgeries to compensate for lower government reimbursements,” Michael Bark, assistant vice president of payer relations at Scripps Health, an integrated health system, says.

This is another great example of how it is possible to drive lower-cost, higher-quality care. We need more leaders, whether payers or employers, to take these kinds of steps to reimburse for increased value in health care services. As I’ve said in previous blogs such as , we get what we pay for; the more we direct our reimbursement dollars toward high-value care, the more we’ll get. The interesting thing in this case is that it’s employers who are demanding high value; with 50% of Americans receiving their insurance through their employers, if employers start demanding this type of approach, we might see change.

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It’s all about the premiums, for a tiny but mighty political powerhouse

By |2017-10-20T04:24:21+00:00October 19th, 2017|Health Plans, Health Reform, Insurance, Uncategorized|

It’s all about the premiums, for a tiny but mighty political powerhouse

On October 17, 2017, Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) announced a bipartisan deal to “stabilize individual market premiums and provide meaningful state flexibility.” The latest “repeal and replace” proposal from Alexander/Murray came just a week after U.S. Health and Human Services (HHS) Acting Secretary Eric Hargan and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced cost-sharing reduction (CSR) payments would be “discontinued immediately based on a legal opinion from the Attorney General.” Lots and lots has already been written about the CSR policy change (I recommend Timothy Jost’s piece in Health Affairs for a brief summary of the major issues).

Professor Jost explains the CSRs succinctly:

The Affordable Care Act (ACA) requires insurers to reduce cost sharing for individuals who enroll in silver plans and have household incomes not exceeding 250 percent of the federal poverty level (FPL). These provisions reduce the out-of-pocket limit for these enrollees—particularly for those with incomes below 200 percent of poverty—and sharply reduce deductibles, coinsurance, and copayments. The reductions cost insurers around $7 billion a year currently.

Based in part on what the Senators heard from state officials in early September (see this ) the Alexander/Murray deal would continue to fund the CSRs for two years, would allow people of any age to purchase catastrophic health plans and would allow states even broader latitude to waive provisions of the Affordable Care Act (ACA) in order to lower premiums – for example, by allowing health insurers to offer products that do not cover all of the essential health benefits.

If lower priced products can’t be offered in the portion of the market that is unsubsidized, it is difficult to foresee how a bill gets through Congress. A tiny but mighty political powerhouse is fighting hard for a fix that solves a very particular problem in the current ACA structure.

It’s all about the premiums

Keep in mind, about 17 million people receive their health insurance through the ACA health exchanges (see Charles Gaba chart – aka The Psychedelic Donut – below) – approximately 5% of the American public. Of those 17 million people, 1.6 million are in Exchange plans, but do not receive a subsidy. That is, health insurance companies are not obliged to reduce their premiums or cost-sharing requirements, most likely because they make more than 250 percent of FPL – about $30,000 for a single person, or $61,500 for a family of four.

Charles Gaba’s Psychedelic Donut Chart

Florida’s 6.6%

Let’s take the example of Florida. Just before the CSR announcement from the Trump Administration, one of the state’s largest insurers, Florida Blue, said it would be raising premiums, on average, 38 percent, for the 2018 plan year. A spokesperson explained:

“So who’s the one losing in this scenario? It’s the people who don’t get a subsidy to help out. Florida Blue has about 66,000 of their 1 million Obamacare customers who would have to cover the premium increases on their own. These are people with higher incomes, many who are maybe freelancers or self-employed.

But who are those 66,000 people? In my estimation, that mighty 6.6%, and their counterparts across the U.S., are the ones who have effectively driven this policy change, and much of the “repeal and replace” demands over the past few years. Small business owners, especially tiny ones with fewer than five employees, are very focused on the issue of rising premiums and have been instrumental in communicating to their elected officials that their premiums are too high. The National Small Business Association (NSBA) 2016 Politics of Small Business Survey last year asked nearly 1,000 small business owners (47% of the respondents had five or fewer employees) what they contacted elected officials about.

What was the top issue? Controlling the costs of health care (see chart).

And amazingly, “97 percent of small-business owners say they vote regularly in national contests, compared to” only 58 percent turnout for the general election in 2012.

The Florida Blue spokesperson explained why this is such a hot-button issue for these politically-motivated, non-CSR-receiving, small business owners:

“The good news in all this: most people in Florida get private health insurance through their work. Those increases are going to be much more normal – about 8 percent on average for small companies.”

There is the whole issue in a nutshell. If you run a business or are self-employed and you make more than about $30,000 a year, you pay high premiums that jump 20, 30, 40 percent or more a year. In Florida, the average premium increase on the Exchange will be 45 percent in 2018, and the highest approved rate increase was 71 percent according to the Florida Office of Insurance Regulation. But if you buy the same insurance a slightly different way, either by becoming self-insured or becoming an employee of a bigger company, your premium increase will not be as great.

As Washington and the states continue to debate “repealing and replacing” the Affordable Care Act, keep an eye on what policy proposals mean for the politically-active small business owner. Fixes such as allowing anyone to buy catastrophic health plans (not just those under the age of 30) or allowing health insurers to sell products that offer fewer benefits will likely lower the premiums for people who buy health insurance on their own, whether tiny businesses or freelancers. Stopping payment of the CSRs won’t fix the problem small business voters are having with health care. If a proposal fixes this tiny but mighty political group’s problem with the ACA, the likelihood of passage improves immensely.

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