A new report aims to break partisan gridlock over healthcare in Washington, but key parts like payment cuts and new taxes would generate massive opposition from provider and payer lobbies.
Washington, D.C.-based think tank Bipartisan Policy Center (BPC) unveiled a plan (PDF) Wednesday that offers a series of recommendations it believes can serve as an antidote for the partisan rancor surrounding healthcare.
Here are the proposals most likely to draw opposition:
Cut private insurance rates paid to hospitals
Part of the report targets lowering hospital costs in noncompetitive markets to combat high healthcare costs. BPC recommends that hospitals get approval from the Federal Trade Commission (FTC) for a hospital merger. If a hospital doesn’t enter into talks with the FTC or gets an exception from the Department of Justice, then they must put a limit on how much they can charge private insurers.
The report offers one of two options for how much hospitals can charge. The first option is to phase down the average private insurance rate to match those paid by Medicare Advantage plans over a five-year period.
The other option is setting a maximum rate that would reflect the average private insurance rate for a competitive market.
The authors also want to prohibit hospitals from using noncompetitive contracting requirements. One example is an all-or-nothing requirement that makes plans contract with an entire system or network as a precursor to getting a contract with a single hospital or provider group.
The goal of the recommendation is to address increasing market consolidation.
“In some cases, consolidation has helped facilitate delivery system reform and preserved access to care, but in others, consolidation has resulted in increased market share and higher prices,” the report said.
Insurers better prepare for Cadillac Tax 2.0
The Affordable Care Act’s (ACA's) “Cadillac” tax on high-cost health plans was finally repealed by Congress late last year. The 40% excise tax on high-cost plans was reviled by Democrats and Republicans, but healthcare economists say it was important to get hold of employer-sponsored insurance costs that are exempt from taxes.
BPC’s report aims to make another crack at employer-sponsored insurance. The report calls for limiting the income tax exclusion for employer-sponsored insurance at a dollar amount equivalent to the 80th percentile of single and family employer plan premiums.
“This limitation would only be applied to expensive plans purchased by higher-income individuals,” the report said. “it is expected that this policy will increase federal revenue substantially relative to current law.”
But the opposition to the “Cadillac” tax, which was delayed several times and never implemented before its demise, could complicate efforts.
America’s Health Insurance Plans, the insurance industry’s top lobbying group in D.C., has long argued the tax would lead to higher premiums for all workers. It appears likely that a new way to attack the employer-sponsored tax exclusion would generate the same opposition and an uphill battle.
There are some parts of the report that would likely give the insurance industry reason to cheer, however. These include the recommendation to resume ACA cost-sharing reduction payments and the creation of a federally funded reinsurance program for ACA exchanges. The report also calls for resuming funding for ACA enrollment outreach.
BPC also wants to speed up the use of value-based payment models by facilitating beneficiary enrollment in value-based payment models, including financial incentives for seeking in-network services, the report said.