Insurers Fight Hospitals' Paying Premiums - Offers to Help Low-Income People Afford Coverage Could Undercut Economics of Law; Contradictory Guidance from HHS

From The Wall Street Journal:

Nonprofits, including some hospitals, say paying premiums would ensure coverage for people currently uninsured who can't afford even a small monthly payment for health insurance.

But insurers say they can't make a profit unless the health-insurance exchanges created by the Affordable Care Act draw a balanced mix of healthy and sicker customers. The law's rocky start, many insurers fear, has already skewed the mix toward people in worse health. Help from nonprofits or hospitals could speed the arrival of less healthy customers into the exchanges, outpacing the arrival of younger, healthier people who might not cross paths with hospitals.

 

Getting coverage for people with pre-existing illnesses is both an objective of Mr. Obama's health law and a priority for hospitals, which often must write off the cost of treating the uninsured. Many hospitals have already invested in signing people up.

 

Some want to go further and pay premiums for frequent patients, reasoning that their bottom lines would ultimately benefit. In the 25 mostly Republican-led states that aren't currently expanding their Medicaid programs under the law, some people who fall below the poverty line don't qualify for any federal assistance and would likely need charitable help to afford coverage.

 

Hospitals making such payments would be fulfilling the law's mission of extending coverage to millions of Americans, said Melinda Hatton, the American Hospital Association's general counsel. "We thought it was the kind of thing the Affordable Care Act would really support and encourage," she said.

 

But such plans have drawn criticism. "It is a conflict of interest for hospitals and drug companies to pay patients' premiums and cost-sharing for the sole purpose of increasing utilization of their services and products," said Karen Ignagni, head of America's Health Insurance Plans, the health-insurance industry's trade group.

 

The group's general counsel, Joseph Miller, said laws regulating tax-exempt organizations could limit activities aimed at enriching themselves or another organization.

 

The federal government has provided apparently contradictory guidance. In late October, Health and Human Services Secretary Kathleen Sebelius wrote a letter to a congressman stating that she didn't consider plans sold through the insurance exchanges to be federal health-care programs, and so weren't subject to rules that prevent health providers from giving subsidies or rebates to enrollees.

 

But less than a week later, an HHS unit that is implementing the health law said it would "discourage" hospitals and other commercial entities from paying premiums. It asked insurers to reject such payments and warned that it would take further action if necessary.

 

"HHS has significant concerns with this practice, because it could skew the insurance risk pool and create an unlevel field," said the guidance issued Nov. 4. An HHS spokesman declined to comment further.

 

Hospitals are exploring whether to make payments on behalf of their patients, despite the ambiguities, said Dan Mendelson, chief executive of consultant Avalere Health.

 

Brian Massey, vice president for strategy at St. Vincent's Health System in Birmingham, Ala., an outpost of the Catholic nonprofit chain Ascension Health, said it was interested in paying premiums for people with incomes that fall below the level needed to secure federal subsidies. Under the law, the lowest earners were expected to enroll in Medicaid, the joint federal-state program for the poor, but Alabama chose not to expand its version.

 

The Tennessee Hospital Association said it was eyeing whether to create its own foundation to help its members do the same. "We're trying to work our way through that morass," said Craig Becker, president of the group. "We'd probably put some money up, and so would the hospitals, if we figure out we can swing it."