Government oversight fades as taxpayer money filters down through layers of companies eager to seize on Medicaid's substantial growth under the ACA. Medicaid officials say they have authority only over the health plans, not their subcontractors.
Marcela Villa isn't a big name in health care — but she played a crucial role in the lives of thousands of Medicaid patients in California. Her official title: denial nurse.
Each week, dozens of requests for treatment landed on her desk after preliminary rejections. Her job, with the assistance of a part-time medical director, was to conclusively determine whether the care — from doctor visits to cancer treatment — should be covered under the nation's health insurance program for low-income Americans.
She was drowning in requests, she said, and felt pressed to uphold most of the denials she saw. "If it was a high-dollar case, they tried to deny it," Villa said. "I told them you can't deny it just because it's going to cost $20,000."
Villa, 32, did not work for the government. She did not even work for an insurer under contract with the government. She worked for a company now called Agilon Health. Owned by a private equity firm, it's among the legion of private subcontractors looking to profit from Medicaid patients.
California's Medicaid program, known as Medi-Cal, has determined that the Long Beach company, which was paid to coordinate care for about 400,000 patients, improperly denied or delayed care for at least 1,400 of them, state officials confirmed. The state Department of Managed Health Care is investigating further.
The state findings, along with internal company documents and a whistleblower complaint obtained by Kaiser Health News, shine a light on the potential dangers of outsourcing care for poor people. Government oversight, not rigorous to begin with, fades as taxpayer money filters down through layers of companies eager to seize on Medicaid's substantial growth under the Affordable Care Act. Medicaid officials say they have authority only over the health plans, not their subcontractors.
In an interview, Agilon chief executive Ron Kuerbitz acknowledged that some patients experienced modest delays in care but disputed that any suffered unjustified denials. He noted that an internal investigation by the company found no evidence of "systemic" denials and that most of the problems existed before Agilon took over another firm, Primary Provider Management Co., in 2016.
"We did the right thing when it was identified," Kuerbitz said of the problems. "We disclosed it, we investigated it, and we pursued a remedial path."
Such concerns are not isolated to one company. Last year, KHN reported on similar irregularities at SynerMed, a Medicaid subcontractor that coordinated care for about 650,000 patients in California.
In response to a whistleblower complaint, the state Medicaid program said it found "widespread deficiencies" at SynerMed that put patients "in imminent danger of not receiving medically necessary healthcare services." The company's staffers had falsified documents for years to cover up improper denials of care, according to state officials.
Then SynerMed abruptly shut down, and some of its patients moved to Agilon's medical groups.
Skimping On Services?
Nearly three-quarters of the 73 million low-income Americans on Medicaid are now in managed care, in which states pay health insurers fixed monthly amounts for each enrollee to cover the range of services they need.
Under this system, keeping patients as healthy as possible is one way to make money. Another is to deny or skimp on services.
Increasingly, Medicaid plans outsource the work of managing patients' health and medical treatment to subcontractors like Agilon — passing along a share of the government money coupled with the financial risk posed by a fixed budget.
These firms can be powerful gatekeepers. They run physician groups, bear responsibility for forming doctor networks and judge whether a request for care is necessary.
Agilon is a big player in California — doing business with insurers such as Molina Healthcare and Blue Shield of California — and it's now expanding in other states like Texas and Ohio.
Primary Provider Management Co. ran several medical groups, including Vantage Medical Group with more than 5,000 physicians across Southern California. By building off PPMC's base of Medicaid enrollees in California, the New York private equity firm that owns a majority stake in Agilon — Clayton, Dubilier & Rice — sought to coordinate care in Medicaid and Medicare Advantage plans across the country. (CD&R did not respond to interview requests.)
For several years, the problems at PPMC, and then Agilon, went undetected. Then, in early 2018, Agilon disclosed to the California Department of Managed Health Care its discovery that employees had been altering records prepared for auditors, which it said was not known to top management.
According to an internal report, completed in May and obtained by KHN, staffers had been falsifying documents since at least 2014 to pass audits by health plans. Employees were changing dates, for example, to cover up delays or withholding certain files so they couldn't be reviewed.
That same month, an anonymous whistleblower sent a letter to health plans and government officials, urging them to investigate "illegal, unethical" conduct at the firm. "Senior management delays treatments for cancer patients without any regard of patient's well-being, to save their dollars," the whistleblower wrote in a two-page letter reviewed by KHN. "They brag about how profitable we are."
In response to the allegations raised by the whistleblower and state, Agilon opened another internal investigation. That second report, finished in June, found inadequate staffing to handle the volume of work, various shortcuts and practices outside industry "norms" and improperly denied claims. Both internal reports were released to the state.
A top official Inland Empire Health Plan, one of the largest Medicaid insurers in the country, said the plan also looked into Agilon's conduct and found instances in which its patients were harmed.
In an interview, Inland Empire CEO Bradley Gilbert said Agilon denied a patient's transfusions for anemia, causing the person to be hospitalized. It also improperly denied cardiac rehabilitation to a patient recovering from a heart attack, he said. Inland Empire canceled its contract with Agilon's Vantage Medical Group in August, he said.
A 'Manager Told Me To Do It'
Agilon's June report depicts an operation that was often stretched thin: Nurses were handling 120 to 200 requests for care per day, on average, with no full-time medical director to review the findings.
From 2014 until May, the company relied on a family physician who was working 10 to 12 hours a day running his own medical practice, according to the report.
Dr. Reuel Gaskins was busy seeing his own patients at the Hampton Medical Clinic in Riverside, Calif., where a red neon sign flashes "Open" in the front window. In an interview, Gaskins said he reviewed cases during breaks throughout the day and after normal work hours. He said he left Agilon in April.
Ultimately, Agilon's internal investigation found that patient care may have been denied 439 times since 2014 without a physician's review of the medical records — a potential violation of state law. Under California law, only a licensed physician or health care professional who is "competent to evaluate the specific clinical issues involved" can determine medical necessity.
Gaskins said he was not aware of allegations that medical decisions were made without his review until he was interviewed by Agilon's lawyers.
"That's inappropriate and unacceptable," he said. "It really bothered me when I heard about it."
The June report also found that Villa helped alter 20 files at the request of a supervisor in 2014 so her employer could pass an upcoming audit by an insurer.
A "manager told me to do it," Villa said in an interview. "They were so adamant that everything look perfect for the auditors."
A few days after the company's lawyers made that discovery, Agilon sent Villa home on paid leave, the nurse said. She said that when she returned to work in August, she found she had been replaced as denial nurse, and shortly after that, she was fired.
Meanwhile, in recent months, Agilon has mended its relationships with some insurers and won new Medicaid contracts.
Consumer advocates worry that the concerns surrounding Agilon and SynerMed signal a much larger problem in the burgeoning Medicaid managed-care industry.
"These private entities get very little oversight," said Linda Nguy, a policy advocate at the Western Center on Law & Poverty in Sacramento, "and there's real harm being done to patients."
For the vast majority of the federal government's public health efforts, though, it's business as usual.
That's because Congress has already passed five of its major appropriations bills, funding about three-fourths of the federal government, including the Department of Health and Human Services and the Department of Veterans Affairs.
But seven bills are outstanding — including those that fund the Interior, Agriculture and Justice departments — and that puts the squeeze on some important health-related initiatives.
The shutdown itself is not about health policies. It's the result of differences of opinion between the administration and congressional Democrats regarding Trump's so-called border wall. But it's far-reaching, nonetheless. Here's where things stand:
Funding for "big-ticket" health programs is already in place, alleviating much of the shutdown's immediate potential impact.
Since HHS funding is set through September, the flagship government health care programs — think Obamacare, Medicare and Medicaid — are insulated.
That's also true of public health surveillance, like tracking the flu virus, a responsibility of the Centers for Disease Control and Prevention. The National Institutes of Health, which oversees major biomedical research, is also fine. It's a stark contrast to last January's shutdown, which sent home about half of HHS's staff.
But some other public health operations are vulnerable because of complicated funding streams.
Although the Food and Drug Administration falls under the HHS umbrella, it receives significant funding for its food safety operations through the Department of Agriculture, which is entirely caught up in the shutdown.
The USDA provided an estimated $2.9 billion last year to the FDA for these oversight efforts, which involve everything from food recalls to routine facility inspections and cosmetics regulation. Not having those dollars now means, according to the FDA contingency plan, that about 40 percent of the agency — thousands of government workers — is furloughed.
The FDA's responsibilities for drug approval and oversight are funded by user fees and are not affected. Regulation of tobacco products is also continuing.
Health services for Native Americans are also on hold.
Because Congress has yet to approve funding for the Indian Health Service, which is run by HHS but gets its money through the Department of the Interior, IHS feels the full weight of the shutdown. The only services that can continue are those that meet "immediate needs of the patients, medical staff, and medical facilities," according to the shutdown contingency plan.
That includes IHS-run clinics, which provide direct health care to tribes around the country. These facilities are open, and many staffers are reporting to work because they are deemed "excepted," said Jennifer Buschik, an agency spokeswoman. But they will not be paid until Congress and the administration reach a deal.
Other IHS programs are taking a more direct hit. For example, the agency has suspended grants that support tribal health programs, as well as preventive health clinics run by the Office of Urban Indian Health Programs.
Public health efforts by Homeland Security and the EPA face serious constraints.
The Department of Homeland Security's Office of Health Affairs assesses threats posed by infectious diseases, pandemics and biological and chemical attacks. It is supposed to be scaling back, according to the department's shutdown contingency plan. This office is just one component of the 204-person Countering Weapons of Mass Destruction Office, which is retaining about 65 employees during the funding gap.
Other DHS health workers are likely to work without pay — for instance, health inspectors at the border, said Peter Boogaard, who was an agency spokesman under the Obama administration. According to DHS's plan, the vast majority of border patrol employees will continue working through the shutdown.
The Environmental Protection Agency has also run out of funding. According to its contingency plan, it's keeping on more than 700 employees without pay, including those who work on Superfund sites or other activities where the "threat to life or property is imminent." (More than 13,000 EPA workers have been furloughed.)
That limits the agency's capacity for activities including inspecting water that people drink and regulating pesticides.
But it's not just regulation. The public health stakes are visceral — and sometimes, frankly, pretty gross.
Just look at the National Park Service, which has halted restroom maintenance and trash service for lack of funding. On Sunday, Yosemite National Park in California closed its campgrounds. On Wednesday, Joshua Tree National Park, also in California, did the same.
Why? Per a park service press release: "The park is being forced to take this action for health and safety concerns as vault toilets reach capacity."
Utah's Orrin Hatch is leaving the Senate, after 42 years. The Republican led bipartisan efforts to provide health care to more kids and AIDS patients. He also thrived on donations from the drug industry.
Sen. Orrin Hatch, the Utah Republican retiring from 42 years in the Senate as a new generation is sworn in, leaves a long list of achievements in health care. Some were more controversial than others.
Hatch played key roles in shepherding the 1983 Orphan Drug Act to promote drug development for rare diseases, and the 1984 National Organ Transplant Act, which helped create a national transplant registry. And in 1995, when many people with AIDS were still feeling marginalized by society and elected leaders, he testified before the Senate about reauthorizing funding for his Ryan White CARE Act to treat uninsured people who have HIV.
"AIDS does not play favorites," Hatch told other senators. "It affects rich and poor, adults and children, men and women, rural communities and the inner cities. We know much, but the fear remains."
Hatch, now 84, co-sponsored a number of bills with Democrats over the years, often with Sen. Ted Kennedy of Massachusetts. The two men were sometimes called "the odd couple," for their politically mismatched friendship.
"This is an area the country has made enormous progress on, and it's something we should all feel proud of — and Senator Hatch should too," said Joan Alker, executive director of Georgetown University's Center for Children and Families.
Before CHIP was enacted, the number of uninsured children in America was around 10 million. Today, it's under half that.
Hatch's influence on American health care partly came from the sheer number of bills he sponsored — more than any other living lawmaker — and because he was chairman of several powerful Senate committees.
"History was on his side because the Republicans were in charge," said Dr. David Sundwall, an emeritus professor in public health at the University of Utah and Hatch's health director in the 1980s.
When Ronald Reagan was elected president in 1981, the Senate became Republican-controlled for the first time in decades. Hatch was appointed chairman of what is now known as the Health, Education, Labor and Pensions Committee. The powerful legislative group has oversight of the Food and Drug Administration, Centers for Disease Control and Prevention and the National Institutes of Health.
"He was virtually catapulted into this chairmanship role," Sundwall said. "This is astonishing that he had chairmanship of an umbrella committee in his first term in the Senate."
In 2011, Hatch was appointed to the influential Senate Finance Committee, where he later became chairman. There he helped oversee the national health programs Medicare, Medicaid and CHIP.
Hatch's growing influence in Congress did not go unnoticed by health care lobbyists. According to the watchdog organization Center for Responsive Politics, in the past 25 years of political campaign funding, Hatch ranks third of all members of Congress for contributions from the pharmaceutical and health sector. (That's behind Democratic senators who ran for higher office — President Barack Obama and presidential nominee Hillary Clinton).
"Clearly, he was PhRMA's man on the Hill," said Dr. Jeremy Greene, referring to the trade group that represents pharmaceutical companies. Green is a professor of the history of medicine at Johns Hopkins University School of Medicine. Though Hatch did work to lower drug prices, Greene said, the senator's record was mixed on the regulation of drug companies.
For example, an important piece of Hatch's legislative legacy is the 1984 Hatch-Waxman Act, drafted with then-Rep. Henry Waxman, an influential Democrat from California. While the law promoted the development of cheaper, generic drugs, it also rewarded brand-name drug companies by extending their patents on valuable medicines.
The law did spur sales of cheaper generics, Greene said. But drugmakers soon learned how to exploit the law's weaknesses.
"The makers of brand-name drugs began to craft larger and larger webs of multiple patents around their drugs," aiming to preserve their monopolies after the initial patent expired, Greene said.
Other brand-name drugmakers preserved their monopolies by paying makers of generics not to compete.
"These pay-for-delay deals effectively hinged on a part of the Hatch-Waxman Act," Greene said.
Hatch also worked closely with the dietary supplement industry. The multibillion-dollar industry specializing in vitamins, minerals, herbs and other "natural" health products, is concentrated in his home state of Utah.
"There was really no place for these natural health products," said Loren Israelsen, president of the United Natural Products Alliance and a Hatch staffer in the late 1970s.
As the industry grew, there was a debate over how to regulate it: Should it be more like food or like drugs? In 1994, Hatch sponsored the Dietary Supplement Health and Education Act, known as DSHEA, which treats supplements more like food.
"It was necessary to have someone who was a champion who would say, 'All right, if we need to change the law, what does it look like,' and 'Let's go,'" Israelsen said.
Some legislators and consumer advocacy groups wanted vitamins and other supplements to go through a tight approval process, akin to the testing the Food and Drug Administration requires of drugs. But DSHEA reined in the FDA, determining that supplements do not have to meet the same safety and efficacy standards as prescription drugs.
That legislative clamp on regulation has led to ongoing questions about whether dietary supplements actually work and concerns about how they interact with other medications patients may be taking.
DSHEA was co-sponsored by Democrat Tom Harkin, then a senator from Iowa.
While that kind of bipartisanship defined much of Hatch's career, it has been less evident in recent years. He was strongly opposed to the Affordable Care Act, and in 2018 called supporters of the heath law among the "stupidest, dumb-ass people" he had ever met. (Hatch later characterized the remark as "a poorly worded joke.")
In his farewell speech on the Senate floor in December, Hatch lamented the polarization that has overtaken Congress.
"Gridlock is the new norm," he said. "Like the humidity here, partisanship permeates everything we do."
U.S. District Judge Reed O'Connor has a history of siding with Republicans on ideologically motivated lawsuits. His ruling last week, in which he sided with the GOP on a challenge to the Affordable Care Act, was not a one-off.
In fact, critics say, his history is ultimately why that case was before him in the first place.
By all accounts, O'Connor's ruling is sweeping. It says the entire health care law became invalid when Congress zeroed out, in 2017, the tax penalty for Americans who don't have health insurance — a penalty that had been tied to what's known as the law's individual mandate that nearly everyone have insurance.
"I think he went too far in rejecting the entire law," said Josh Blackman, a conservative legal scholar and professor at the South Texas College of Law in Houston. "I think he could have stopped short and simply severed the Obamacare mandate."
While O'Connor's decision may seem a bit extreme to some legal scholars, it wasn't surprising.
Justin Nelson, a law professor at the University of Texas at Austin, said if you know anything about O'Connor's past rulings, this was predictable.
"In case after case," Nelson said, "what he has shown is that he has tended to side with the Republican attorneys general who are bringing ideological suits."
Nelson recently ran an unsuccessful campaign to oust Texas Attorney General Ken Paxton, who led this multistate legal challenge to the health care law. Nelson said Paxton and the other Republican attorneys general have filed lawsuits in the U.S District Court for the Northern District of Texas because they know there's a good chance they'll get O'Connor as the judge.
"Judge O'Connor has been the go-to judge for Ken Paxton and Republican attorneys general who want to file ideological suits in any court across the country," Nelson said. "Reed O'Connor is their best shot to get a ruling that they like."
O'Connor, who did not respond to NPR's requests for comment, was a Republican staffer on Capitol Hill before he was nominated to the federal bench by George W. Bush in 2007. So far, he has had to weigh in on at least a couple of contentious issues.
For example, O'Connor is known for striking down an Obama-era rule that protected transgender students. In that case he also sided with Paxton, who filed that legal challenge.
"They've done this over and over again on the hope that Judge O'Connor would rule on behalf of an ideological agenda," Nelson said. "And I don't think that is proper. I don't think that is right."
Paxton has filed lawsuits in other courts, too. He filed challenges to Obama-era immigration laws in a court in South Texas, which also has a reliably conservative judge on the bench.
Blackman said criticism of this practice is "overblown."
"All lawyers generally file the case where it leads to the best chance of success," Blackman said. "And to the extent that [there's a] criticism — that's criticism of the attorney general and not of the judge. The judge doesn't control which cases come to him."
Furthermore, because O'Connor is getting a lot of ideological lawsuits brought to him, it's making his voting record more controversial, Blackman added.
"I think by virtue of the attorney generals' form selection," he said, "Judge O'Connor's had a greater share than average of hot-button issues."
However, Blackman said, he is concerned that criticisms of controversial opinions are increasingly shifting toward the judges who issue the opinions — instead of toward the decisions themselves.
"President Trump does this all the time," Blackman said. "Politicians do it all time. And usually this happens to Supreme Court justices, but here it is being done to a district court judge in Fort Worth — who, 99 percent of his docket no one will even know about."
No matter how controversial O'Connor's ruling on the health care law, Blackman said, the decision over the Affordable Care Act will now pass to another judge, as the case moves on to a higher court.
While the judge's decision is a long way from implementation, here are five ways that eliminating the ACA could upend health care for many, if not most, Americans.
If Friday night's district court ruling that the Affordable Care Act is unconstitutional were to be upheld, far more than the law's most high-profile provisions would be at stake.
In fact, canceling the law in full — as Judge Reed O'Connor in Fort Worth, Texas, ordered in his 55-page decision — could thrust the entire health care system into chaos.
"To erase a law that is so interwoven into the health care system blows up every part of it," said Sara Rosenbaum, a health law professor at the George Washington University School of Public Health. "In law they have names for these — they are called super statutes," she said. "And [the ACA] is a super statute. It has changed everything about how we get health care."
The decision is a long way from implementation. O'Connor still must rule on several other aspects of the suit brought by 18 Republican attorneys general and two GOP governors. And a group of state Democratic attorneys general has promised to appeal O'Connor's decision, which would send it to the 5th Circuit Court of Appeals and, possibly, the U.S. Supreme Court. The high court has rejected two previous efforts, in 2012 and 2015, to find the law unconstitutional.
Meanwhile, here are five ways that eliminating the ACA could upend health care for many, if not most, Americans:
1. Millions Could Lose Coverage Directly
More than 20 million Americans who previously were uninsured gained coverage from 2010 to 2017. Some of that was due to an improving economy, but many also gained the ability to buy their own coverage through the law's federal subsidies to defray the cost of insurance. Other provisions of the Affordable Care Act played a significant role, including its ban on restrictions for people with preexisting medical conditions, expansion of the Medicaid program to more low-income adults and allowing adult children to stay on their parents' health plans until reaching age 26.
If the law were reversed, federal funding for Medicaid and individual insurance subsidies would stop, and insurers could once again refuse coverage to people with health problems or charge them more.
2. Fundamental Changes To The Health Care System Could Be Stymied
The impact of eliminating the ACA could be felt well beyond those people who are the direct beneficiaries of the law.
Gail Wilensky, who ran the Medicare and Medicaid programs under President George H.W. Bush, said such a change "would be very disruptive because so much [of the ACA] has affected the way health care is organized and delivered and the way insurance is provided."
For example, said Rosenbaum, the increase in coverage meant that "suddenly it became possible for health care systems to care for, by and large, an insured population."
Previously many hospitals, doctors and other health providers spent considerable time and effort figuring out how to treat those without insurance and not go broke.
After the ACA kicked in, these providers began to worry less about whether they would get paid, and the federal government started pushing them to create new efforts aimed at improving the quality of care.
Those include measures basing some federal payments on patient outcomes rather than each individual procedure performed and strategies to improve health across the population through initiatives like improving the availability of healthful food, bicycle paths and preventive care.
If millions of people lost insurance, she said, those health providers "would have to go back to wondering how they will be able to pay their bills."
3. Medicare and Medicaid Would Be Dramatically Altered
The popular Medicare program — which covers an estimated 60 million seniors and people with disabilities — was a major focus of the ACA.
Elimination of the law would take away some popular benefits the law conferred — everything from free preventive care to the closing of the "doughnut hole" in Medicare's prescription drug coverage. The doughnut hole refers to a coverage gap that had previously exposed large numbers of beneficiaries to thousands of dollars in drug costs.
The law also changed the way Medicare paid for hospital, home health and outpatient care. Many current payment policies are based on authority provided by the ACA, and if it went away, Medicare would have to rewrite those payment regulations. Millions of beneficiaries belong to accountable care organizations that were created under the health law, and it is unclear how their care would be affected.
The biggest change in the Medicaid program would be the elimination of the expansion of coverage. Loss of the ACA would also roll back a 23-percentage-point boost in Medicaid prescription drug rebates, which has saved states billions of dollars, according to Cindy Mann. She ran Medicaid under President Barack Obama and is now a partner at the health consulting firm Manatt Health.
The ACA required states to calculate Medicaid eligibility differently — changing what counts as income — so all the work states did to alter their information systems would have to be recalculated, she said.
4. Wide Array Of Health Programs At Risk
Shorthand descriptions of the health law often stop at its provisions providing consumer protections and expanding Medicaid. But the ACA included sweeping changes to other parts of the health system that rarely get mentioned.
For example, it created the first pathway for Food and Drug Administration approval of generic copies of expensive biologic drugs, by incorporating the Biologics Price Competition and Innovation Act of 2009. Biologic drugs are more difficult to reproduce than other types of medications.
Also hitching a ride on the ACA was a long-delayed bill providing permanent spending authority for programs provided by the Indian Health Service, which serves Native Americans.
And the law included a series of grant programs to help train more health professionals who would be needed to treat the millions of newly insured Americans.
All those programs would be thrust into doubt by invalidating the law.
The ACA's protections for preexisting conditions — banning insurers from charging people with health problems higher premiums or refusing to sell to them altogether — built on similar protections for people with employer insurance. Congress included those protections in HIPAA, which was enacted in 1996. And far more people are touched by HIPAA than by the ACA, because far more people get health insurance through their employer than the individual market.
However, when Congress wrote the ACA, it incorporated HIPAA safeguards into the preexisting condition provision. That means if the ACA is struck down, the HIPAA protections might disappear as well.
5. Even The Trump Administration's Health Agenda Could Be Compromised
President Donald Trump has railed against the health law, but his Department of Health and Human Services has a priority list that relies in some significant ways on the continued existence of the ACA.
For example, efforts to address the opioid epidemic — one of the administration's top health challenges — could be seriously set back if the Medicaid expansion were to end. Medicaid is the largest single payer for mental health and substance abuse problems.
Much of the president's efforts to limit drug prices flows through the Center for Medicare & Medicaid Innovation (CMMI), which was created by the ACA and would lose its legal authority if the law became invalid.
Similarly, the administration is using this center to pursue "bundling" payments for certain surgical procedures to try to get more value for dollars spent.
Biologic drugs, made from living organisms, are big moneymakers partly because they have little competition from 'biosimilars.' It's a very different story in Europe.
Europeans have found the secret to making some of the world's costliest medicines much more affordable, as much as 80 percent cheaper than in the U.S.
Governments in Europe have compelled drugmakers to bend on prices and have thrown open the market for so-called biosimilars, which are cheaper copies of biologic drugs made from living organisms. The brand-name products — ranging from Humira for rheumatoid arthritis to Avastin for cancer — are high-priced drugs that account for 40 percent of U.S. pharmaceutical sales.
European patients can choose from dozens of biosimilars, 50 in all, which have stoked competition and driven prices lower. Europe approved the growth hormone Omnitrope as its first biosimilar in 2006, but the U.S. didn't follow suit until 2015 with cancer-treatment drug Zarxio.
Now, the U.S. government stops short of negotiating and drugmakers with brand-name biologics have used a variety of strategies — from special contracting deals to overlapping patents known as "patent thickets"— to block copycat versions of their drugs from entering the U.S. or gaining market share.
As a result, only six biosimilars are available for U.S. consumers.
European countries don't generally allow price increases after a drug launches and, in some cases, the national health authority requires patients to switch to less expensive biosimilars once the copycat product is proven safe and effective, said Michael Kleinrock, research director for IQVIA Institute for Human Data Science.
If Susie Christoff, a 59-year-old who suffers from debilitating psoriatic arthritis, lived in Italy, the cost of her preferred medicine would be less than quarter of what it is in the U.S., according to data gathered by GlobalData, a research firm.
Christoff tried a series of expensive biologics before discovering a once-a-month injection of Cosentyx, manufactured by Swiss drugmaker Novartis, worked the best.
Without the medicine, Christoff said, her fingers can swell to the size of sausages.
"It's 24/7 constant pain in, like, the ankles and feet," said Christoff, who lives in Fairfax, Va. "I can't sleep, [and] I can't sit still. I cry. I throw pillows. It's just … awful."
At first, Christoff's copay for Cosentyx was just $50 a month. But when a disability led her to switch to a Medicare Advantage plan, her out-of-pocket costs ballooned to nearly $1,300 a month — more than three times her monthly car loan.
Christoff, with the help of her rheumatologist, Dr. Angus Worthing, tried Enbrel, Humira and other drugs before finding Cosentyx, the only drug that provides relief.
Christoff's case is "heartbreaking," Worthing said.
Novartis declined to respond to questions about Cosentyx's price. Instead, like other pharmaceutical companies, Novartis says it offers patient assistance programs for those who can't afford the drug. Christoff said she doesn't qualify for financial assistance.
Like other biologics, Cosentyx costs thousands of dollars per month. The annual cost of Christoff's treatment runs about $65,000 in the U.S. In Italy, where competition and price negotiations play a bigger role, it would run about $15,000, according to GlobalData.
In England, Dr. Christopher Griffiths, a lead researcher at the National Institute for Health Research who treats patients with Cosentyx, said the National Health Service would pay about 10,000 pounds, or less than $13,000.
And those drastic price differences are true even though there is no biosimilar version of Cosentyx yet available in Europe, and might not be for years.
The cost of the drug is taking a toll on Christoff. This past summer, her progressive disease made it difficult to enjoy the annual family vacation with her three grown children and their kids in Virginia Beach, Va.
"I can't get down on the sand to play with my kids without help. I can't get up without help," Christoff recalled. "I'm not ready to stop trying. But I'm also not ready to go through my entire retirement fund to walk."
Unlike Cosentyx, rival drugs — Humira, Enbrel and Remicade — all face biosimilar competition in Europe. Only Remicade has competition from a lower-cost biosimilar in the U.S., and Humira isn't expected to have a copycat competitor in the U.S. market until 2023. Humira, made by AbbVie, is the world's top-selling drug.
In late October, Wall Street analyst Ronny Gal at Sanford C. Bernstein & Co. noted that AbbVie agreed to drop Humira's price by 80 percent in one Nordic country to combat biosimilar competition. During the company's quarterly conference call, AbbVie chief executive Richard Gonzalez said the drug's discount was as low as 10 percent and as high as 80 percent across the continent, with the highest discounts in Nordic countries.
"These are markets where it's 'winner takes all' across the entire … category, so includes Remicade and Enbrel as well," Gonzalez said in November, adding that Nordic countries represent about 4 to 5 percent of overall revenue in AbbVie's international business.
Concerned about how much biologics cost the U.S. health system and patients, Food and Drug Administration Commissioner Scott Gottlieb announced an "action plan" this summer that included tapping the Federal Trade Commission for help, saying he was "worried" about the biosimilar market.
"The branded drug industry didn't build its success by being business naive; they are smart competitors," Gottlieb told an audience full of advocates, industry insiders and researchers at the Washington, D.C.-based Brookings Institution in July. "But that doesn't mean we need to embrace all of these business tactics or agree with them and think they are appropriate."
One of these business tactics involves so-called rebate traps, in which financial deals are cut to make sure patients can get only a biologic, not a biosimilar. International drugmaker Pfizer alleged in a September 2017 lawsuit that exclusionary contracts created by Johnson & Johnson prevented use of its biosimilar by health insurers, hospitals and clinics.
Johnson & Johnson's wildly successful biologic Remicade, the brand-name version of infliximab, produced $6.3 billion in worldwide in 2017. Pfizer launched its copycat drug, Inflectra, in the U.S. in October 2016, noting in the announcement that it would price the drug at a 15 percent discount to Remicade's wholesale price.
Still, health systems such as Geisinger Health, based in Pennsylvania, say they have had difficulty switching to the less expensive alternative.
"J&J has done a really good job of entrenching themselves in the market," said Jason Howay, manager of formulary services at Geisinger.
The health system ultimately decided it wanted to switch all adults to Pfizer's biosimilar, saying it provided the same quality of treatment. But Johnson & Johnson had "bundled" the prices of other drugs with Remicade. So if Geisinger stopped using Remicade on adult patients, J&J could stop providing discounts on other drugs, such as those used for cardiology, Howay explained. "It weaves a very tangled web."
A spokeswoman for Janssen, Johnson & Johnson's main pharmaceutical subsidiary, says the drugmaker does offer "more attractive contract terms" to buyers who use a wider range of J&J medicines. "Our contracting approach has always prioritized access for patients and their providers," Meredith Sharp says.
Geisinger negotiated with biosimilar maker Pfizer and won still lower prices to make up for lost savings on the other J&J drugs. It's now transitioning all adult patients to the less expensive biosimilar.
Another business tactic is creating patent thickets, in which drugmakers win numerous patents to block competitors entirely. Humira, which treats arthritis and Crohn's disease, has more than 100 patents protecting it in the U.S. By contrast, cheaper biosimilar versions of the AbbVie drug rolled out in October in Europe, where patent laws are less likely to offer such protection.
Such tactics are stifling competitors, according to Bruce Leicher, a former senior vice president and general counsel for Momenta Pharmaceuticals, a Cambridge, Mass., biotechnology company focused on rare-disease drug development. Smaller companies are "struggling now" to plan launches of new drugs. Momenta cut half its staff in October, including Leicher, and announced plans to shift away from five biosimilar development programs.
Leicher said the FDA's biosimilar action plan under Gottlieb is a good first step but "would have been wonderful to see five years ago."
Other lingering regulatory burdens have hampered biosimilar adoption as well. This summer, Medicare began reimbursing doctors and hospitals differently for biosimilars. Before that change, patients could pay more out-of-pocket for less expensive rheumatoid arthritis biosimilars than for the brand-name biologics.
And, unlike more chemical compound generics, like aspirin, a pharmacist cannot automatically replace a brand-name biologic with the biosimilar. More than 40 states have passed laws around how and when doctors and pharmacists can substitute a biosimilar for a biologic. Federal guidelines are still not established.
In addition, the FDA requires each biosimilar name to include a random suffix, ostensibly to differentiate it from the biologic drug. That can be confusing and could cause patients and physicians to believe the products are significantly different in quality, said Christine Simmon, who promotes biosimilars for the trade group Association for Accessible Medicines.
She said the naming convention "fuels the fire" of a broader debate about whether to trust biosimilars, adding, "Making sure doctors and patients are comfortable with the products is integral to uptake."
When people seek help at a drug treatment center for an opioid addiction, concerns about having contracted hepatitis C are generally low on their list.
They've often reached a crisis point in their lives, said Marie Sutton, the CEO of Imagine Hope, a consulting group that provides staff training and technical assistance to facilitate testing for the liver-damaging virus at more than 30 drug treatment centers in Georgia.
"They just want to handle [their drug problem]," she said. "Sometimes they don't have the bandwidth to take on too many other things."
Even though health care facilities that serve people who use drugs are well-positioned to initiate screening, too often that is not happening, recent studies have shown. Not testing these patients for hepatitis C is an enormous missed opportunity, public health experts agree.
"It's a disease that can be cured the moment we identify somebody," said Tom Nealon, president and CEO of the American Liver Foundation. "Not testing is incomprehensible when you look at what hepatitis C does to their bodies and their livers."
As the number of people who inject drugs has soared, the rate of hepatitis C infection, frequently tied to sharing needles, has climbed steeply, too.
People who are infected with hepatitis C can go for years without symptoms, so they may not have any inkling that they're sick. That delayed onset makes screening important, advocates say, since people may unwittingly infect others.
Screening people who misuse drugs for the deadly virus is a commonsense strategy to get people cured and break the cycle of transmission. But there are obstacles — sometimes a lack of money, staff or other resources.
"Reimbursement rates for hepatitis C testing often don't match the cost," said Andrew Reynolds, hepatitis C and harm reduction manager at Project Inform, an advocacy group. If patients test positive, they need to be linked to treatment, and financial support for staffing to do that is often limited, he said.
Only 27.5 percent of 12,166 substance abuse facilities reported offering testing for hepatitis C in 2017, according to research published on the blog for the journal Health Affairs in October. It is one of the first studies to look at this issue since the federal government began reporting on testing for HIV and hepatitis C in its national survey of substance abuse and treatment services in 2016.
When researchers narrowed their analysis to the much smaller number of opioid treatment programs that are federally certified to use methadone and other drugs in treatment, a higher, but still not overwhelming, proportion — just over 63 percent — said they offered screening for hepatitis C.
"We certainly thought the numbers would be higher," said Asal Sayas, a co-author of the analysis and director of government affairs at amfAR, the Foundation for AIDS Research. "Testing is one of the most fundamental forms of prevention."
In primary care settings, the situation sometimes isn't much better, even when patients have a diagnosed "opioid-use disorder."
An analysis by Boston Medical Center researchers of nearly 270,000 medical records of people aged 13 to 21 who visited federally qualified health centers from 2012 to 2017 found that 36 percent of the 875 patients with that diagnosis were tested for hepatitis C.
"Even in a setting with an identified risk factor in opioid-use disorder, too few youths are being screened for hepatitis C," said Dr. Rachel Epstein, a postdoctoral research fellow in infectious diseases at Boston Medical Center and a co-author of the study, which was presented at the annual meeting of the Infectious Diseases Society of America in early October.
Hepatitis C is a virus that causes inflammation to the liver, in some cases leading to scarring, liver cancer and death. It is transmitted through blood, including contaminated needles that people share when they inject drugs.
The initial test for hepatitis C is an inexpensive blood test to check for antibodies in the blood that indicate exposure to the virus. If that antibody test is positive, a second test is necessary to find out if the virus is circulating in the bloodstream, which would mean someone is infected with the virus. The secondtest can cost several hundred dollars, experts say.
To be sure, some federally qualified health centers have made testing for hepatitis C a priority. Clinicians at two community health centers run by Philadelphia FIGHT — which was established as an AIDS service organization — test many of their patients who are at high risk because of injection drug use or unsafe sexual practices, such as having sex with an infected partner. The screenings are often done on an annual basis, with a reminder to the medical personnel in the patient's electronic medical record.
"That's something pretty basic that we've done in our community health centers to make sure we're testing people and providing a cure," said Dr. Stacey Trooskin, director of viral hepatitis programs at the FIGHT centers and clinical assistant professor at the University of Pennsylvania Perelman School of Medicine.
Among at least 3.5 million people who have the disease, most are baby boomers who were infected before routine screening of donated blood began in the early 1990s. In recent years, as the drug epidemic has taken hold, new infections have been concentrated among young people who inject drugs, in particular those between ages 18 and 29, according to the federal Centers for Disease Control and Prevention.
Complicating the effort to get people screened is the fact that many of the people who enroll in drug treatment programs are uninsured, said Imagine Hope's Sutton. In states that have expanded Medicaid under the Affordable Care Act, the program generally picks up the tab for hepatitis C testing and treatment, though often with restrictions. But 14 states, including Georgia, haven't expanded that coverage for adults with incomes up to 138 percent of the federal poverty level ($16,753 for one person).
Insurance coverage isn't the only challenge. If people have to come back to a clinic for the second test, chances are they may fall through the cracks and not get that follow-up.
When a patient tests positive, a nurse or counselor at the drug treatment center, who is likely overbooked working with patients to address their addiction, must carve out time to explain this new diagnosis and talk through treatment options.
"There's a whole system of care that needs to be built for these people and, unlike HIV, it doesn't exist for hepatitis C at this time," Sutton said.
Like many other clinics around the country, hepatitis C testing at Georgia drug treatment centers is supported with funding from the Focus program, sponsored by drugmaker Gilead — the first company to offer a new class of highly effective drugs that generally cure hepatitis C in three months or less with few side effects.
Gilead didn't respond to requests for comment.
Finding resources to pay for treatment is also difficult. The high costs of the new drugs when they were introduced led some public and private insurers to strictly limit access. But, in recent years, drug prices have come down as more drugs hit the market and many states have loosened Medicaid restrictions.
For example, New Mexico's Medicaid program doesn't require that people be sick or abstain from using illicit drugs or alcohol for a time before starting treatment. Still, "hepatitis C testing remains out of reach for many because their providers aren't aware that their patients can get treated," said Kimberly Page, an epidemiologist and professor of internal medicine at the University of New Mexico who focuses on hepatitis C.
Joaquin Lopez had emergency gallbladder surgery after rushing to an ER last year. He has been haggling with Baptist Memorial Hospital in Memphis over what he owes ever since.
The 37-year-old college professor was hit with a nearly $8,000 bill from the out-of-network hospital — that was after the $11,000 he and his insurer had already paid.
Consumers are increasingly vulnerable to such so-called balance bills, which represent the difference between what insurers pay and hospitals' list prices. List prices can be several times higher than what they accept from Medicare or in-network insurers.
Congress is considering bipartisan legislation to limit balance billing. But some legal scholars say that patients should already be protected against some of the highest, surprise charges under long-standing conventions of contract law.
That's because contract law rests on the centuries-old concept of "mutual assent," in which both sides agree to a price before services are rendered, said Barak Richman, a law professor at Duke University.
Thus, many states require, and consumers expect, written estimates for a range of services before the work is done — whether by mechanics and plumbers or lawyers and financial planners.
But patients rarely know upfront how much their medical care will cost, and hospitals generally provide little or no information.
While consumers are obligated to pay something, the question is how much? Hospitals generally bill out-of-network care at list prices, their highest charges.
Without an explicit price upfront, contract law would require medical providers to charge only "average or market prices," Richman said.
In several recent cases, for example in New York and Colorado, courts have stepped in to mediate cases where a patient received a big balance bill from an out-of-network provider. They ordered hospitals to accept amounts far closer to what they agree to from in-network private insurers or Medicare.
"This is the amount they are legally entitled to collect," said Richman.
Lopez's bill came after he sought help at the emergency room following excruciating abdominal pain. Sent home with pain medication, he awoke hours later to a phone call from the hospital: Come back! A review of his tests showed he needed surgery. He didn't stop to ask if the hospital was in his network, or for a cost estimate.
So, in an example like that, is there mutual assent?
Hospitals say yes, that signed admission forms, which include a promise to pay, constitute mutual assent, even if there was no price disclosed.
No, counters Richman. If a tax preparer provided no upfront estimate, he could not suddenly bill a client for $10,000 if the going rate for the service was $1,000 or less. The higher fee would never hold up in court of law, since there was no "mutual assent" about price.
But what, if anything, should Lopez offer to pay? What is reasonable or average in a system where the price of a hip replacement can range from $15,000 to $150,000, or a blood test can be $5 to $500?
Based on the hospital's list prices, Lopez's bill came to nearly $21,000. Insurer Cigna, using a formula it said is similar to what Medicare uses, said the maximum it would cover was $11,160. It paid 80 percent of that lower amount, and Lopez paid the remainder. Baptist hospital is billing Lopez for nearly $8,000 more, saying it wants the full charges.
"I'm an economist," said Lopez, who teaches at the University of Memphis. "I understand how abusive these practices are. There is not a single market price."
Indeed. Healthcare Bluebook, a consumer website that uses claims data to estimate costs , shows gall bladder surgery in Memphis costs as little as $14,000, but could be tens of thousands more, with a "fair price" of about $18,000 — which is generally less than full billed charges, but more than in-network insurers would pay.
That complexity — and the cost of hiring an attorney — have made legal challenges to medical bills on the basis of contract law relatively scarce.
Also, "it's not a well-settled area of the law," said Hall.
Even though hospitals have lost some cases, their arguments have also found traction.
The Virginia Supreme Court last year ruled in favor of a hospital, saying admission paperwork patient Glenn Dennis signed in the emergency room was a valid contract. The hospital had sued him over an $84,000 bill for his out-of-network care.
Still, the court left open the key question of just how much of that Dennis owed, sending that back to a lower court. That court previously ruled that Dennis owed only about $500 on top of the $27,255 his health insurer had paid. That reflected a discount the hospital commonly gave uninsured patients, the circuit court judge wrote. The two sides are still working on a settlement.
For those caught up in the disputes, determining a fair price is hard.
"That's where courts struggle, creating health care prices," said Mark Hall, director of the Health Law and Policy Program at Wake Forest Forest University, who backs the contract law protection theory.
One way is to look at what hospitals accept for in-network care from private insurers. But hospitals generally object to releasing that, saying it's a trade secret.
A 2017 Texas Supreme Court ruling has, at least for now, broken through this position. It said that hospitals in some legal disputes must disclose those in-network rates they allow in-network insurers to pay.
"Hospitals are really trying to prevent this sort of thing because they are uncomfortable having someone ask them to justify [their charges]," said George Nation, a law professor at Lehigh University in Pennsylvania, who filed a court brief in the Texas case on behalf of the patient's argument.
In June, the hospital involved in the dispute asked for a rehearing, saying such disclosure would weaken its bargaining power. Several other hospitals are backing its request, illustrating the broad concern.
Lopez has hired a lawyer to fight his bill.
Consumers in some states might have legal backup under balance-billing laws. But rules vary, often don't apply to all types of insurance and may cover only emergency medical treatment costs.
Tennessee's law, which went into effect in July, requires hospitals to notify patients of estimated costs and that they could receive balance bills.
After getting a balance bill, consumers should attempt to negotiate a reduced amount, said Wendy Netter Epstein, a health law professor at DePaul University College of Law. Online lookup tools like Healthcare Bluebook or Fair Health can provide estimates of average costs for procedures.
Lopez said he offered to pay 20 percent of the disputed amount, but it has not — so far — been accepted.
Baptist Memorial Hospital encourages patients to file appeals and, if a better offer is made by the insurer, "we accept it and dismiss the patient's balance," said David Elliott, vice president of managed care and CEO of Baptist Health Services Group, in an emailed statement.
Lopez has appealed twice to insurer Cigna to cover more of the bill —without success.
For now, his lawyer has written to the hospital, disputing that Lopez owes more than was already paid by the insurer. The letter said Lopez planned to avail himself of any protection under state or federal law.
More Americans are now employed in health care than in any other industry.
The Bureau of Labor Statistics, which tallies job creation, says that for most of this year the health sector outpaced the retail industry. Only government, on all levels, employs more people. One of the consistent features of the BLS reports is that health care has reliably added thousands of jobs to the economy each month.
November was no different. The health care industry created 32,000 jobs, adding to the 328,000 health care positions created since early 2017.
But what kinds of jobs? Were they highly paid doctors and hospital executives or were they positions on the other end of the pay scale, such as nursing home aides and the people who enter data for billing in hospitals and clinics?
It's hard to know for sure, because the BLS monthly data measure industries not occupations and what information it does have on occupations is overly broad. For instance, it says hospitals accounted for about 13,000 jobs in November. Another 19,000 jobs were for "ambulatory" care, which is a broad term for services delivered outside of hospital systems, like in clinics and private doctors' offices.
But another set of BLS data offers additional insights. Every two years, BLS puts out a wonky set of numbers called "industry-occupation matrices," which more finely slices job categories and predicts which will grow or shrink over the next 10 years.
The most recent, from 2016, still provides a pretty accurate snapshot, according to Joanne Spetz, a professor at the University of California-San Francisco's Institute for Health Policy Studies.
Registered nurses are the fastest-growing occupation. They account for more than 25 percent of jobs in hospitals. If that share remained the same last month, 3,289 of the new hospital jobs added in November went to RNs.
It's likely that many of the hospital jobs went to medical assistants, who currently make up only 1.5 percent of the industry. Medical assistants are usually the people taking your vitals and helping the doctor take notes. The BLS expects about a 16 percent increase in these jobs in the next decade.
"There will be a fair amount of growth in physician and surgeon employment in the next decade, but so many more medical assistants than physicians," Spetz said.
The national median pay of a registered nurse is $70,000 a year, according to more BLS data. For medical assistants, it is $32,480. Doctors' median pay is more than $200,000.
Far more of those medical assistants found work outside the hospital in the ambulatory sector: almost 1,300.
There is also a good chance that in these ambulatory settings many of the newly created jobs were filled by non-medical staff.
As of 2016, fewer than 30 percent of staff in ambulatory settings were workers whom Spetz calls "paper pushers." If the trend held up, around 5,700 of the hires in November, or 30 percent of ambulatory jobs, fall into these categories. These jobs can pay as much as medical assistants. The BLS says the median income of "medical record and health information technicians" is about $39,000 a year. BLS is predicting around a 20 percent increase in "information and record clerks" and another 22 percent increase in "secretaries and administrative assistants."
But the idea that hospitals and doctors' offices are hiring only lower-paid support staff might be overblown. The BLS figures "health care practitioners and technical occupations" still make up more than 37 percent of the ambulatory industry, and "health diagnosing and treating practitioners" are almost 23 percent.
So nearly 70 percent of ambulatory hires last month were probably physicians or other skilled professionals like registered nurses, licensed practical nurses, social workers and personal care aides.
"What we have seen over the past couple years is with the job growth in health it is not dominated by back office," said Ani Turner, an economist who focuses on health sector labor trends with Altarum, a nonprofit health research and consulting organization.
Another thing hiding in the numbers? A dissipating distinction between ambulatory and hospital care. Traditionally, hospital jobs were pretty straightforward; they referred to the doctors, nurses and support staff who worked in hospitals.
But as business models shift, more care is given outside of hospital walls, something not reflected in employment numbers that split health into two distinct categories. Employees who staff the clinics, surgery centers, labs and imaging centers run by hospitals are counted as hospital staff, Turner said, though they work in outpatient settings.
So those 13,000 new hospital jobs the BLS cited last month may not reflect real-world trends about where hiring happens.
"Whether in physicians' offices, free-standing clinics or hospital outpatient clinics, you'll see it as the two separate settings, but the same trend," Turner said.
Increasing costs plus rising deductibles and copayments have driven millions who don't get a subsidy to drop their coverage or turn to insurance that's cheaper, less comprehensive, and sometimes inadequate.
Like millions of Americans in this final week of open enrollment for the Affordable Care Act marketplaces, Diane McCabe is shopping for health insurance.
"At my age, I can't go without it even though I'm healthy now," said McCabe, 62, a self-employed real estate agent in Luzerne County, Pa. "But the process is frustrating, and the expense significant."
That's because McCabe is one of the 5 million people who buy their own coverage and pay the full cost. Her income is too high to qualify for a government subsidy to help defray the premium.
McCabe this week settled on a $773-a-month policy that has a $4,000 deductible — the amount she'll have to pay out-of-pocket before insurance kicks in. She estimates that will account for at least 15 percent of her income in 2019.
Under the ACA, people who earn up to 400 percent of the poverty level (about $48,500 for an individual and $100,400 for a family of four in 2019) are eligible for premium subsidies. Eighty-seven percent of the 10.6 million people with ACA plans this year received a subsidy.
The financial challenge for people like McCabe has come into much sharper focus during the past year, as insurance premiums have spiked.
These increasing costs plus rising deductibles and copayments have driven millions who don't get a subsidy to drop their coverage or turn to cheaper, less comprehensive — and sometimes inadequate — insurance.
The Trump administration has highlighted the plight of the unsubsidized and said that its regulatory revamp of the health law will give consumers new, more affordable options. One of the key administration efforts is extending the use of short-term insurance plans that have lower premiums but don't provide the full benefits that the ACA requires, such as continuous coverage of preexisting conditions or maternity care.
Those plans are not eligible for subsidies now, but, under regulations the administration proposed in October, subsidies could be available starting in 2020.
Critics counter that the administration's approach runs a high risk of undermining core features of the ACA. And a legal battle over the administration's proposed new rules is likely.
"The subsidy structure is unquestionably a problem," said Chris Sloan, a director at Avalere Health, a policy and research think tank in Washington, D.C. "It's a cruel reality for those above the income cutoffs. But it's not clear that the administration's actions are the best solution."
Opponents of the Trump administration's proposals contend they could lead young, healthy people to abandon ACA coverage and choose less comprehensive and expensive coverage — leaving more older and sicker people in the exchanges. That would result in steadily increasing costs for those plans, and could eventually destabilize the ACA marketplaces, policy analysts say.
Overall, about 4.4 million fewer people who buy coverage on their own were insured in 2018 compared to 2015, a decline from 18.8 to 14.4 million. Most of the decline occurred among people who don't get subsidies.
On And Off Insurance
Cameron and Lori Llewellyn, of Dover, Del., have found insurance just too expensive.
In June 2017, Lori left a job that provided the family with good health coverage. She wanted to start her own business — a clothing boutique. Cameron is a self-employed construction contractor.
The Llewellyns tried to enroll in a plan through the ACA exchange in the summer of 2017. But Cameron's income was too high to qualify for a subsidy. On the open market, they were quoted rates as high as $2,000 a month, with deductibles of $4,000 or more, for themselves and their 8-year-old daughter, Bryce.
They opted instead to go without coverage until the end of 2017. Then again, for this year, they ended up not qualifying for subsidies and decided to go without insurance.
"We just couldn't justify the expense, especially with that high of a deductible," Lori said. "But it wasn't a comfortable situation. We wanted coverage for all the reasons people know they need it."
For 2019, the Llewellyns are trying again. They have enrolled through the state ACA exchange in a policy with a premium of $1,286 and a $7,900 deductible, but with a subsidy that will cover the entire premium.
Spencer Ricks, 36, a self-employed attorney in Salt Lake City, is choosing a different path. He, his wife and their 3-year-old daughter bought ACA-compliant coverage in 2016. Their premium rose from around $600 in 2016 to $970 in 2017 with a $10,000 deductible.
Ricks was told his premium for 2018 for the same plan would be $1,200 with a $13,500 deductible. He pulled the plug on the family coverage and instead enrolled his wife — who was pregnant — in a plan costing $570 a month with a $5,000 deductible.
Ricks and his daughter then joined a Christian Healthcare Ministry plan costing $157 a month, with a $10,000 deductible. For 2019, Ricks is enrolling the whole family is another religious-affiliated plan, costing $529 a month with a $2,250 deductible.
But the most prevalent alternative to an ACA plan for people who don't get subsidies in 2019 is likely to be a short-term plan.
Previously available for only 90 days — primarily to bridge gaps in coverage — the Trump administration expanded that time frame to 364 days.
The plans can be bought at any time, but sales are up now because more people are shopping during the ACA's open enrollment, said Sean Malia, a senior director at eHealth, an online brokerage.
Melanie and Pete Howell, of Austin, Texas, are among eHealth's newest customers. They had an ACA plan this year costing $1,100 a month with a $7,000 deductible. It covered the couple and their two children, ages 22 and 17.
The Howells' income is too high to qualify for a subsidy. When their insurer notified them that the premium was going to $1,400 a month in 2019, they opted for a short-term plan that will cost $380 a month with a deductible of $12,500.
The plan does not cover prescription drugs, and the Howells will pay 30 percent of the costs for doctor, emergency room visits and any surgical procedures.
"This buys us some time at a much more affordable price to figure out what to do for the longer term," said Melanie Howell.
No Easy Solutions
Although both ACA critics and advocates say that addressing the high cost of coverage for non-subsidized families should be a priority, there are no easy bipartisan fixes in sight.
Many ACA supporters urge legislation that raises the threshold for subsides above 400 percent of poverty — to, say, 600 percent. But that stokes concerns of added federal spending.
A more realistic approach, for now, could be to permit states to experiment with ways to help those over the 400 percent threshold, said Sabrina Corlette, a research professor at the Georgetown University's Health Policy Institute.
For example, with federal government permission, eight states have already launched, or will in 2019, "reinsurance" programs that redeploy federal dollars to help insurers cover the costs of families with high medical expenses. The programs have kept premium costs down for both people who get subsidies and those who don't.
Another proposal would permit states more leeway to restructure the ACA subsidies to provide less help to people with high-cost health care needs and more help to those not currently eligible for subsidies.
"Letting states try things out has bipartisan support and there are mechanisms for that already in place," Corlette said. "It would seem to have the best chance of yielding something useful to help this population [the unsubsidized] for now."