Mike Hennessy

UPDATE: After this article was posted, the Senate voted 52-47 to pass a bill that would repeal Obamacare. While this bill will surely be vetoed by the president should it ever make its way to his desk, it should be noted that the Senate also voted 90-10 to include an amendment to the bill that would repeal the Cadillac Tax. This shows there is strong bipartisan support for repealing the unpopular tax and could possibly prompt the introduction of a standalone bill that garners a veto-proof majority.

After a years-long effort by Congressional Republicans and conservative advocacy groups to repeal the Affordable Care Act was thwarted last year by the Roberts Supreme Court, a new battle to eliminate a major component of the law may be taking shape, one in which the usual pro-repeal advocates may fight alongside some rather unlikely allies.

As the 2018 “Cadillac Tax” deadline for the tax approaches, conservative opponents of the law find themselves in agreement with the AFL-CIO and Democratic lawmakers from across the party, even leading contenders for the Democratic presidential nomination (former ardent supporters of the ACA).

Back in September, Hillary Clinton proudly voiced her opposition to the Cadillac Tax, telling CBS News in a statement that “Too many Americans are struggling to meet the cost of rising deductibles and drug prices. That's why, among other steps, I encourage Congress to repeal the so-called Cadillac Tax, which applies to some employer-based health plans, and to fully pay for the cost of repeal.”

Even the self-described socialist Senator Bernie Sanders (I-VT) favors repeal, co-sponsoring legislation that would strike the excise tax provided an alternative is found for the resulting shortfall in tax revenue. In a 

statement accompanying the introduction of the bill

, Sanders said, “Imposing an excise tax on health insurance plans would be a disaster for millions of middle class Americans. Some have said that this tax only falls on ‘Cadillac’ health care plans, but the reality is that the plans this bill will tax are more like Chevrolets. Workers have fought hard to negotiate decent healthcare benefits, often in exchange for lower pay.  This excise tax unfairly punishes them.”

Under the Affordable Care Act, employers have to pay a 40% excise tax on health benefits for employees whose premiums are more than $10,200 a year for individuals and $27,500 for families. It was promoted as a measure to help curb rising health care costs and has been projected to bring in nearly $90 billion in revenue over the next decade.

However, one of the problems with this tax is that it is indexed to a relatively slow-growing measure of inflation (the consumer price index plus 1 percent through 2019, basic consumer price index thereafter) that typically lags behind the growth in medical costs, which means that companies will pay more per enrollee over time (the Congressional Budget Office has estimated spending will grow by an average of 5.6 percent annually over the next decade).

According to a report on this issue from 

, “the tax will ensnare more companies over time, with some likening it to the alternative minimum tax, originally aimed at the very wealthy but which trickled to those further down the income ladder. About one-third of employers will be hit by the tax in 2018 if they do nothing to change their plans, according to a March survey by Mercer, a benefits consulting firm. By 2022, almost 60 percent will be facing the levy.”

What we’re left with is a tax that will increasingly force companies to choose between cutting back on benefits offered to employees or paying a tax bill that gets bigger over time (and most surely passing those increased costs on to employees and consumers).

So it is no surprise that bipartisan support for repeal is strong and popular across a range of constituencies. In addition to the AFL-CIO strongly favoring repeal, other unions have 

The National Education Association recently 

 of the effects of the law that concluded that although the tax is ostensibly based only on the dollar value of benefits provided, there are several other factors that will likely drive up premiums (including geographic location, age and gender, size of insurance pool, etc), and that “depending on the combination of these premium-driving factors other than benefit level, premiums for a given employer can be expected to exceed the threshold for incurring the tax even for a plan without especially generous benefits. As a result, even though the excise tax is often referred to as a tax on overgenerous benefits, it is likely to be a tax based on factors other than benefit level and beyond the control of health plan members.”

Senior director of the NEA’s center for advocacy and outreach, Kim Anderson , said, “Now that it's clear that the excise tax will have arbitrary and negative consequences, Congress must repeal the excise tax to avoid inflicting harm on American workers and their families.”

Despite its declining popularity, defenders of the Cadillac Tax still claim that it is an effective means of slowing the runaway growth in private health insurance premiums. Recently, 101 economists 

 affirming that “the unlimited exclusion of employer-financed health insurance from income and payroll taxes is economically inefficient and regressive.”

They stated that the Cadillac tax “will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount. The excise tax will discourage the provision of insurance that covers such a large proportion of health care spending that consumers have little incentive to insist on cost-effective care and providers have little incentive to provide it. As employers redesign health insurance plans to hold costs within the tax-free amount, cash wages or other fringe benefits will increase.”

Interestingly, the signatories admitted that they “recognize that measures other than the Cadillac Tax could have been used to restrict the open-ended health insurance tax break,” and implied that they would be amenable repealing the tax provided Congress enacted “an alternative tax change that would more effectively curtail cost growth.”

Assuming lawmakers from both sides of the aisle can summon the political will to work together and muster a veto-proof number of votes in support of repeal, the next battle would be over what to replace the tax with in order to make up for lost revenue.

Here there is much less agreement on what the next steps would be. One proposal that has taken various forms over the years involves capping the amount of tax-free money employers can contribute to their employees’ health benefits. Another option would be to offer generous refundable tax credits to everyone who purchases health insurance.

Whatever ultimately replaces the Cadillac Tax, now is the time for leaders in Washington to press for repeal before the upcoming presidential race inevitably grinds the legislative process to a halt. This may be the last chance to repeal the most unpopular provision of an unpopular health care reform law and replace it with a commonsense alternative that doesn’t unfairly burden America’s businesses and workers. After all, the stated objective of the ACA was to provide better healthcare insurance for all, not reduce it for some for the betterment of others.

Articles

Even Democrats Want to Scrap the Cadillac Tax

With the fifth anniversary of the signing of the Affordable Care Act (ACA) into law upon us, ample time has passed to allow us to take stock of the law’s effects on the practice and business of cardiology, and to make some informed predictions regarding future developments.

At the recently concluded 2015 Annual Scientific Sessions of the American College of Cardiology, the co-editor-in-chief of 

 (also published by our company), Michael E. Chernew, PhD, professor of Healthcare Policy at Harvard Medical School, delivered a presentation on several ways in which the implementation of the ACA has changed the practice of cardiology. Chernew’s talk paid particular attention to the impact of new payment models and accountable care organizations (ACOs).

As noted in this summary of Chernew’s remarks (

), cardiologists “are affected by these changes more than most specialists, as a sizable share of their patients are older, sicker, and reliant on Medicare, which is demanding that physicians change the way they do business.” The most prominent change facing cardiologists and physicians in all specialties is the ongoing move from the traditional fee for service model to an approach that ties payment to value, bundling care across time and provider type.

One of the leading elements of this transition has been the emergence of ACOs, which are defined in the summary linked to above as “healthcare systems that take responsibility for patients at all levels of care, while giving those systems opportunities to share in savings if they produce better-than-expected health outcomes for their patient populations.” Chernew noted that although ACOs were designed to ensure coordination of care and slow spending growth (which he said has definitely happened for cardiologists), the organizations are not without their own challenges, including misaligned incentives, patients seeking care from more than one ACO (and also from non-ACO-affiliated providers), and complex payment benchmarks.

Chernew and another speaker in the session both reiterated that controlling costs in the era of bundled payments is going to come down to learning to better manage outpatient care, and that the shift from fee for service to payment for value is going to put more risk on providers. Local competition and increased consumerism that pushes patients to seek out and compare information on pricing and performance measures are going to drive the market.

Above all, cardiologists have to be proactive in embracing these changes, and get ahead of the curve by working for payment reform in their institutions, show they can contribute value and savings in areas like chronic disease management, and protecting (to the extent they can) extant fee-for-service revenue.

Another speaker underscored the importance of cardiologists becoming more involved in outpatient care, noting that this will represent a true change of mindset, because many practitioners have spent careers doing procedures that had little to do with outpatient care. This means that cardiologists will need to pay more attention to what happens after their patients leave the hospital (better coordination during transitions of care and more focus on where the patient is being discharged to).

We are living through a time of great upheaval and change in health care. Many old ways of doing business and thinking about patient care are going to fall by the wayside as newer approaches that prioritize quality of care and value of service are adopted.

With the fifth anniversary of the signing of the Affordable Care Act (ACA) into law upon us, ample time has passed to allow us to take stock of the law's effects on the practice and business of cardiology, and to make some informed predictions regarding future developments.

New Challenges, New Pressures in Cardiology

, let’s look ahead at the potential post-Affordable Care Act (ACA) health care landscape and examine what a potential ACA replacement may look like should the Supreme Court rule against the Obama administration.

[A quick recap of the case: the plaintiffs in the suit are arguing that, based on a plain-text reading of the actual language of the law, the ACA only provides subsidies for insurance purchased through an exchange set up by an individual state, not for insurance purchased through an exchange set up by the federal government. Currently 34 states use the federal exchanges, with roughly 7.5 million consumers in those states receiving subsidies. If the plaintiffs prevail, those consumers would be in danger of losing those subsidies, and thus in many cases their insurance, unless their state opted to establish an exchange or an alternate solution is proposed at the federal level.]

Until very recently, the thought was that Republicans in Congress, lacking the numbers to override a potential presidential veto of any bill calling for total repeal of the ACA, would instead opt to 

go after several especially unpopular provisions

 of the law. Potential targets included eliminating the tax on medical devices and certain insurance policies, changing the definition of “full-time employee” from 30 hours per week to a realistic 40 hours, and doing away with so-called “risk corridors” in the health law that benefit mainly insurance companies. Risk corridors are a temporary provision of the ACA that calls for the federal government to compensate insurance companies that experience higher than expected costs. According to the 

, if an insurer’s actual claims are at least 3% greater than the claims projected when the insurer set its rates for the year, “the government must reimburse the insurer for half of the excess. If actual claims jump 8% beyond projected claims, the government covers 80% of the excess.” Simply put, we the taxpayers would protect the insurance companies from excessive losses.

However, with the possibility now that the Supreme Court may rule that subsidies provided to consumers who purchase their health insurance through an exchange set up by the federal government are illegal, lawmakers on both sides of the aisle have been scrambling to provide a solution for the millions of consumers who are worried they may no longer be able to afford their coverage.

Several prominent Republican lawmakers have put forth proposed solutions designed to assist consumers who live in states that opted not to establish their own exchange obtain health insurance.

Sen. Orrin Hatch, R-Utah, Sen. Richard Burr, R-NC, and Rep. Fred Upton, R-Mich recently sponsored the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act that would, among other provisions, strike down both the individual and employer mandates of the ACA, establish an age-rating ratio of 5 to 1 (ie, older individuals would pay no more than 5 times what younger, low-risk consumers pay for their coverage), prevent insurance companies from placing lifetime benefit limits on policies, and require insurance plans to offer dependent coverage up to age 26 (though individual states could opt out of this).

 published on this site, insurance subsidies would be provided “in the form of tax credits—rather than offsets to premium costs--but only for those making up to three times the Federal Poverty Level” (the ACA provides subsidies to consumers making up to 4 times the poverty level).

The CARE Act would also allow the sale and purchase of insurance across state lines, eliminating a major barrier to a more efficient market that could dramatically reduce the number of uninsured Americans by as much as 12 million. 

In addition, the CARE Act would “modernize Medicaid” by “giving states more control over the program and allow enrollees to have the option of leaving Medicaid and getting a tax credit that could be used to purchase coverage.” 

Finally, the Republican proposal would also provide long-overdue tort reform by enacting new caps on non-economic damages, limiting attorney fees, and “encouraging states to set up special health courts to adjudicate malpractice cases, with an eye to reducing huge judgment payouts for victims and the attorneys representing them.” 

 by Hatch, Lamar Alexander (R-Tenn.), and John Barrasso (R-Wyo.), the CARE Act isn’t the only option out there. Rather, it is one possibility that enacts common-sense reform while maximizing freedom, liberty, and personal choice in health care. They wrote that Republicans “have a plan to create a bridge” away from the ACA that would “provide financial assistance to help Americans keep the coverage they picked for a transitional period” because it would be “unfair to allow families to lose their coverage, particularly in the middle of the year.”

Millions of consumers have had their existing insurance plans cancelled under the ACA, forcing them to negotiate the deeply flawed HealthCare.gov website to seek out new insurance, which often resulted in drastic increases in their premiums and out-of-pocket costs. After all of this, the authors wrote, the American people “do not deserve further disruption from this law.”

Congressmen John Kline (R-Minn.), Paul Ryan (R-Wisc.), and Fred Upton (R-Mich) outlined a similar proposal in an op-ed published in the 

. They wrote that, because “ObamaCare made health insurance even more costly by requiring plans to include Washington-determined benefits and levels of coverage,” health insurance has become unaffordable for millions of Americans without receiving billions of dollars in federal subsidies. Because the law as written offers such subsidies only to people who purchased their insurance through one of the exchanges set up by a state, millions of Americans who bought their insurance through a federal exchange and have been receiving a subsidy could “lose it because of the administration’s illegal actions.” This would leave families across the country signed up for insurance they can no longer afford.

To mitigate this outcome and protect American families, the authors propose a sensible “off-ramp from ObamaCare—a legislative alternative that leads [us] away from an expensive health-care wreck and toward a patient-centered system.”

Their proposal rests on two key principles: making insurance more affordable by “ending Washington mandates and giving choice back to states, individuals, and families,” and supporting Americans in purchasing the coverage of their choosing.

This solution would make coverage more affordable by allowing participating states to opt out of the ACA’s insurance coverage mandates, as well as opt out of the individual and employer mandates. This would result in a wider array of available insurance plans and more choice for consumers. 

This proposal would also let small businesses band together to purchase group coverage, allow people to purchase insurance across state lines, and enact serious medical liability reform.

This “off-ramp” would replace the current federal tax subsidies with age-adjusted, refundable tax credits to be used for purchasing insurance.

 op-ed believe that “no family should pay for this administration’s overreach.” I couldn’t agree more. Any sensible replacement for the ACA will be a vast improvement on the current mess foisted on the American public by the Obama administration. And now the President and Democrats in Congress are asking the Supreme Court to do their work for them and fix a law that can’t be fixed.

, with the CARE Act and other Republican proposals, the people of this country have clear alternatives to the ACA that offer “decentralized, less regulatory and more consumer-driven” approaches to health care reform that have the potential to cover millions of Americans with insurance at far less cost than the ACA. Here’s hoping the Supreme Court makes the right decision in the coming months so we can all get the health care system we deserve.

Now that the Supreme Court has heard oral arguments in the case of King v. Burwell, let's look ahead at the potential post-Affordable Care Act health care landscape and examine what a potential ACA replacement may look like should the Supreme Court rule against the Obama administration.

There Is Life After the Affordable Care Act

As of January 5, 2015, the Centers for Medicare & Medicaid Services (CMS) recognizes interventional cardiology as its own distinct physician specialty. The result of several years of lobbying by the Society for Cardiovascular Angiography and Interventions (SCAI), the new designation is a major achievement, according to the SCAI, because this recognition will enhance the ability of interventional cardiologists to represent their profession and their patients.

Several months ago, the SCAI offered additional details about why it was pursuing this goal. In an update to its members, the SCAI explained that interventional cardiology “has evolved to a point where many of the patients we treat and the treatments that we can offer are significantly different from those of general cardiology and other cardiovascular subspecialties. Having our own designation will help us to ensure that our concerns and priorities will receive sufficient consideration and will not be lumped in with those of others. This is especially important in today’s healthcare environment, when CMS and other payers are profiling providers based on the costs of the services they deliver to beneficiaries. SCAI expects that payers will soon be calculating the costs of procedures performed by interventional cardiologists and comparing those costs to those for treatments provided by noninvasive cardiologists, potentially leading to unfair, ‘apples-to-oranges’ comparisons of practice patterns and erroneous reporting of our members as outliers.”

The issue of unfair comparisons to outcomes achieved by other cardiologists and internists is at the heart of this effort, especially as those quality metrics are increasingly tied to reimbursement. SCAI secretary Peter Duffy, MD, told one news outlet that the move from a pay-for-volume environment to a pay-for-value system requires that interventional cardiologists be compared to one another in order to get a true picture of the value they bring.

The sicker, more complicated patients seen and treated by interventional cardiologists often have poorer outcomes that can impact quality-of-care performance scores. Advocates say the new designation allows these outcomes (and the level of resource utilization required to achieve them) to be seen and evaluated in the proper context.

Duffy has also noted that the new designation can benefit other noninterventional cardiologists as well, because now both specialists can be reimbursed for their work treating the same patient with less chance of having claims denied.

Achieving recognition as a separate and distinct specialty is an important milestone for interventional cardiology (as it was for cardiac electrophysiology several years ago). The question now is how this will play out against the changing reimbursement landscape, and whether other subspecialties within cardiology (heart failure-transplant cardiology?) will seek to follow the same path.

As of January 5, 2015, the Centers for Medicare & Medicaid Services recognizes interventional cardiology as its own distinct physician specialty. 

Author | Mike Hennessy

Articles

Even Democrats Want to Scrap the Cadillac Tax

New Challenges, New Pressures in Cardiology

There Is Life After the Affordable Care Act

Separate Paths