Medicaid Expansion Will Drive Affordability, Insurance Leader Says

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By Sara Hansard

Sept. 28 — Medicaid expansion will force the U.S. to address the cost of health care, health insurance trade association chief Marilyn Tavenner said Sept. 28.

“Medicaid is going to become the bigger issue [from the] affordability perspective,” said Tavenner, president and CEO of America’s Health Insurance Plans (AHIP), who spoke at the McKesson Health Solutions Conference in Orlando, Fla. She said she would like to see the 19 states that haven’t yet expanded the health-care program for low-income people under the Affordable Care Act do so, and doing that would likely be more difficult if Republican nominee Donald Trump is elected president than if Democratic candidate Hillary Clinton is elected.

Tavenner, who was administrator of the Centers for Medicare & Medicaid Services under President Barack Obama before joining AHIP, noted that Medicaid is now the largest U.S. health-care program with about 75 million enrollees, and she said it will likely grow to about 130 million enrollees if all states expand it under the ACA. Regardless of who wins the White House, she said, the ACA is not likely to be repealed and the troubled health insurance exchanges will need to be fixed.

The current level of health insurance premiums for family plans, averaging about $20,000 a year with high copayments and deductibles, is “not affordable, nor is it sustainable,” Tavenner said.

Changes to Anti-Kickback Rules Needed

After the November elections, AHIP will push for statutory and regulatory changes to anti-kickback prohibitions that make it difficult for physicians to participate in the accountable care organizations called for under the ACA that are aimed at providing better-coordinated, more efficient care, Tavenner said.

AHIP will also press for interoperability of data systems, which will make costs more transparent, and it will work to simplify physician quality measures, she said.

Insurance companies are trying to develop “a simple, standard way to ask questions around provider directories” so that they can be accurately updated, Tavenner said. Consumer studies have found declining interest in whether particular hospitals or doctors are in health plan networks and increasing interest in what drugs are covered, she said. Narrow networks are “here to stay,” she added.

FDA Reauthorization in 2017

During the reauthorization process for laws affecting the Food and Drug Administration in 2017, AHIP will push for changes to allow drugs to be brought to market more quickly, and to remove barriers to introducing biosimilar drugs on the market, Tavenner said. A biosimilar is a product approved by the FDA based on a showing that it is highly similar to an already approved biological product.

AHIP also wants more transparency about how drug companies price their products, Tavenner said. Vermont is the first state to enact legislation with that aim, she said. Health insurers are also pushing drug manufacturers to enter into value-based arrangements under which the effectiveness of particular drugs on patients can be evaluated, she said.

The CMS bundled payment model programs, under which providers are paid set fees for knee and hip replacements, are showing more early promise than ACOs, Tavenner said. The procedures are less costly than they have been in the past as many patients now are in their 50s or 60s, in contrast to prior years when most were in their 80s, and they are able to have the procedures done in sports treatment centers with one-night stays and shorter outpatient therapy, she said.

Three- to Five-Year Contracts

Medicare Advantage plans, Affordable Care Act exchange plans and Medicaid managed care plans are “in a leadership position” to move the U.S. health-care system toward greater value, and there is bipartisan agreement in Washington to that end, Tavenner said.

There needs to be a three- to five-year arrangement between health plans and health-care providers in order to form the type of partnerships necessary to change the system, Tavenner said. Moving from the traditional fee-for-service system to capitated arrangements under which providers are paid set fees for enrollees will take more time to align technology and enable providers to get data, she said.

“There's going to have to be a willingness to participate in performance-based reimbursement models” and accept some financial risk, Tavenner said.

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

For More Information

Information on the McKesson Health Solutions Conference is available at

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