New York Health Plan Association to Policymakers: It’s Time to Take on Health Care Costs—6 Point Plan Aimed at Containing Factors Driving the Rising Cost of Health Care
In the midst of significant fiscal challenges facing the state, the New York Health Plan Association (HPA) today unveiled a comprehensive series of measures for lawmakers and policymakers to consider as they grapple with rising health care costs and a $4 billion budget deficit for 2019. The proposal seeks to address underlying health care cost drivers and to improve the efficiency of the Medicaid program.
“HPA and its members recognize the fiscal reality facing legislators and the difficult choices before them, but simply adding more money does nothing to make health care more affordable for New York residents and employers,” said HPA President and CEO Eric Linzer. “Rather than imposing new taxes, fees and assessments that increase the cost of health care and jeopardize the stability of the marketplace, it is critical to address the factors driving health care costs, along with focusing on meaningful reforms to state programs.”
Among the recommendations HPA is proposing that policymakers take up this session:
1. Ensure Sustainable Medicaid Reforms
Health plans have been consistent, reliable partners in the state’s health reform efforts, helping New York in realizing the goals of its ambitious Medicaid Redesign program and working collaboratively to assure the state’s success in the implementation of the Affordable Care Act. Over the last several years, significant investments have been made to change how care is delivered and financed for individuals in the Medicaid program. Now, Governor Cuomo’s Executive Budget proposes reducing Medicaid rates to nonprofit health plans if their reserves exceed a certain level, which would jeopardize the financial stability of these plans and fails to recognize the ongoing investments these plans have made to ensure that low-income individuals in the state continue to have access to high-quality care. In recent months, HPA has provided policymakers with a series of reform measures that have the potential to save the state’s Medicaid program at least $200 million while making it a more efficient, sustainable and innovative program that better serves the state’s most vulnerable citizens.
2. Recognize that New Assessments Lead to Higher Health Care Costs for Employers &Consumers
With New York’s health care system under attack from Washington, the state should be promoting measures that stabilize the marketplace and address underlying health care costs. However, the Governor’s budget includes a number of new taxes and fees that will increase the cost of health care for employers and consumers and threaten the solvency of health plans. These include:
- A proposed 14 percent tax on health plan earnings, which treats health insurers differently than other insurers in New York and creates an uneven playing field in the state;
- The creation of a “health care shortfall fund” funded from the proceeds when a not-forprofit health plan converts to for-profit status; and
- Reducing the Medicaid rates to nonprofit health plans if their reserves exceed a certain
level, essentially taking health plan reserves to fund the Medicaid program.
The Governor’s proposals would be on top of the $5 billion in various surcharges and fees levied under the state’s Health Care Reform Act (HCRA) that are now the state’s third largest source of revenue after income and sales taxes. Additionally, the state imposes a 1.75 percent premium tax on commercial health insurance policies, which raised an estimated $350 million in 2015 but went directly to the state treasury’s general fund rather than to specific health programs. The state also imposes more than $353 million in Section 206 assessments on health plans – with a $15 million increase proposed in the Governor’s budget – the bulk of which is used to fund operation of the Department of Financial Services. Imposing new taxes and assessments exacerbates the challenge employers and consumers face in finding affordable coverage options.
3. Addressing Runaway Rx Prices
Breakthrough medications offer tremendous clinical benefits for patients, but drug manufacturers should not get a blank check to price drugs at exorbitant rates without the public and policymakers understanding how those prices are established. Today, the prices set by pharmaceutical companies are a mystery. An important first step would be transparency of prescription drug prices in making health care more affordable and understanding whether employers and consumers are getting value for the prices being charged.
4. Ensuring Provider Consolidations Benefit Employers & Consumers
The wave of mergers, acquisitions and affiliations among hospitals, physicians and other providers will reshape the health care system for years to come. While some have suggested that these transactions will result in better integration and improved quality for patients, at the national level there is a growing body of research among policy experts that provider consolidation merely leads to enhanced bargaining power with no notable improvement in the quality of care for patients. State policymakers should monitor closely whether the benefits providers articulate relative to lower costs, better quality and greater clinical integration when joining together are actually realized. Ensuring a robust process for reviewing changes and their impact on the marketplace is essential to ensure that employers and consumers benefit from these transactions through lower costs and better quality.
5. Address Unnecessary & Inappropriate Care to Reduce Waste in the Delivery System
There is wide variation in the use of health care services, including the underuse of some services and the overuse and misuse of others. Research from leading national organizations, including the Leapfrog Group, the Institute of Medicine, and the Agency for Healthcare Research and Quality, have found significant differences in the clinical performance of providers and the quality of care that patients receive. This results in disparate outcomes for patients and can be a barrier to ensuring they receive the right care in the most appropriate setting. Health plan protocols and medical management tools are established with input from practicing physicians and reflect established clinical best practices. They are designed to promote adherence to evidence-based treatment with the goal of improving care, reducing unnecessary costs, and protecting patients, particularly when there is a lack of or conflicting evidence supporting a particular therapy or drug. Policymakers should avoid adopting measures that restrict or limit health plans’ efforts that ensure everyday clinical practice is consistent with safe, evidence based care.
6. Convene the Health Care Quality & Cost Commission Before Adopting New Mandated
Benefits
Created in 2007, the New York State Health Care Quality and Cost Containment Commission was charged with analyzing the cost and efficacy of proposed mandated benefits. Unfortunately, the Commission has never been seated. Today, New York has 40 mandated health benefit laws, among the most of any state in the country. Every year, several new mandated benefits are put forward for consideration. While specific mandates may be well-intentioned, they add to the cost of health care and force employers to include benefits they and their workforce may not want or need, exacerbating the challenge they face to find affordable health care options. Until the Commission has been convened, no new mandated benefits should be adopted. With the affordability of health care the most pressing issue for employers and consumers, Linzer noted the ongoing commitment that health plans have made to containing health care costs, but that making health care more affordable and preserving the state’s health reform efforts is a shared responsibility.
“Our member health plans have been working hard to rein in rising health care costs and contain their own costs. However, protecting the advances New York has made in expanding coverage requires that all participants in the health care system – providers, pharmaceutical companies, health plans and state government – are focused on and accountable for controlling their costs.”