A variety of traditional and non-traditional investors are starting to capitalize on the stability of the Medicare Advantage Program and expansion of the Medicare Advantage Health Plan Market.  These companies are leveraging sophisticated technological interfaces, data, and telemedicine to help improve the patient experience and to maximize the Triple Aim.

Why Medicare Advantage?

Medicare Advantage plans are offered by private insurance companies subject to certain standards established by the Centers for Medicare & Medicaid Services (“CMS”).  While the Medicare Advantage health plans are responsible for meeting specified levels of benefits and service standards and receive premium funding from the government, they have a high degree of autonomy on how they administer the plans to cover enrolled Medicare beneficiaries.  Medicare Advantage funding is risk adjusted for the health status of the enrollee and as a result, effective Medicare Advantage plans (“MA Plans”) are highly dependent upon real time data sharing.

Disfavored no more

Recent developments show that Medicare Advantage has more bipartisan support than the ACA Marketplace and is less susceptible to political intrigues.  However, this was not always the case. Not too long ago, Medicare Advantage was considered a “privatization of Medicare” and insurance companies were accused of making a profit off of the Medicare Program.  In February 2013, federal officials announced a 2.2% cut to Medicare Advantage reimbursement.  The political attacks on Medicare Advantage were not well received by the Medicare Advantage enrolled seniors who vocally began to defend their beleaguered program.  The patients began a campaign of communication to members of Congress, touting the benefits of engaged Medicare Advantage healthcare providers and health related initiatives such as fitness and nutrition counseling.  This caught the skeptics between a rock and a hard place.  Some Congressional Democrats have noted that they support killing the program but cannot because senior constituents love it.  After significant grassroots lobbying, coalition building, and industry efforts, the proposed 2.2% reduction was transformed into a minor increase by April 2013.  This turnaround was primarily due to patient and provider advocacy with thousands of seniors participating in letter writing campaigns to protect their Medicare Advantage Program.  Medicare Advantage went from a political pariah to a bipartisan tolerated program within a few years.

Medicare Advantage is here to stay

Fast forward to 2018, Medicare Advantage is marketed as an innovative health care option that will provide more choices and lower premiums.  The Trump Administration is providing greater flexibility to companies offering benefits in Medicare Advantage plans.  Medicare Advantage is expanding beyond the retiree states of Florida, Arizona, and California with significant inroads in all fifty states.  The growth has caught the eye of innovative healthcare investors and market consolidation has produced larger plans with stronger infrastructure including captive staff-model delivery systems.  Medicare Advantage continues to grow with 33% of Medicare eligible beneficiaries currently enrolled in MA Plans.  Significant opportunities exist for companies which already possess sophisticated data analytics and coordinated care systems.  Notably, one such player, Clover Health, announced on August 27, 2018 that it is also launching Medicare Advantage plans in six new markets in 2019.  Clover Health is a San Francisco based startup that uses data analytics and artificial intelligence to deliver health care.  Currently, Clover Health provides services for 30,000 seniors and others eligible for Medicare in parts of Georgia, New Jersey, Pennsylvania and Texas.  Only time will tell how successful starts ups such as Clover Health will be in the Medicare Advantage marketplace.  However, this investment is one indicator that despite the rhetoric around health care in America, Medicare Advantage is here to stay.

In the tech world, blockchain technology appears to be the panacea to all problems.  As blockchain technology becomes increasingly popular, many industries are trying to determine the best way to use the new phenomenon. Healthcare is no different in this quest. Health care is an optimal candidate to benefit from development of innovative ways to solve its impending issues using transformational technology. Blockchain could be the technology that helps to alleviate some of health care’s problems, such as the incredibly fragmented delivery of care and the painstakingly slow reaction to technological advances.

What is Blockchain Technology?

An over-simplified explanation of blockchain is an online database that stores information on a network of computers. Information also known as “a record” is stored in a block. For example, a record of you paying Mr. Smith 10 dollars is stored in a block. Traditionally, that information is saved in a database at a data center. However, blockchain technology stores that record on an individual computer with a time stamp (the “block”).  Any change to that information is then stored on another individual computer with a time stamp.  Each individual computer holds a block of information that is chronologically time stamped, which creates the blockchain. Thus, information cannot be edited or changed without the verification from all parties who have access to a block in the blockchain.  Blockchain technology distributes and decentralizes information.  There is no central company or one person that holds the information. This makes it extremely difficult for any one person to take down or corrupt the network. Traditionally, blockchain technology is used as a public transaction ledger for bitcoin. Bitcoin users utilized the technology to mitigate the issue of double spending, spending the same single digital coin more than once, without the need of one trusted authorizer or central server. 

Blockchain and Health Care

Blockchain technology could play a role in the industry’s goal to improve the quality of care through care coordination. Care coordination often involves the sharing of information between multiples providers. Blockchain technology could be used to facilitate this process in a more efficient manner by storing a variety of information, including provider and patient details, within electronic health records (EHR) on a network of computers. Blockchain would store the information on various computers, such that information entered into an EHR could be stored across a network of computers that includes providers and the patient. Providers and the patient would hold blocks of information, allowing each provider and each patient to validate the updates to that patient’s record with the consensus of all the providers and the patient. Using blockchain in this fashion would give patients control over their care while also encouraging care coordination because providers would have to interact with one another to update a patient’s file. In this sense, Blockchain could take the first step in facilitatating the improvement of patient care as a whole.

Blockchain could also reduce the health care industry’s susceptibility to privacy attacks or breaches because of its decentralized and distributed structure. Privacy attacks often involve a hacker entering a system or a database, but, with blocks held in multiple locations instead of one database, blockchain technology would help to minimize hacker infiltration.

However, as with any heavily regulated industry, implementing blockchain will not be easy. There are state and legal roadblocks that hinder blockchain’s viability. Health Insurance Portability and Accountability Act (“HIPAA”), for example, could hinder the ability of sharing health information technology between a network of computers due to restrictions on sharing of Personal Health Information (PHI). Furthermore, state and federal laws would have to be updated to facilitate this technological advance. Despite these hurdles, there may be a glimmer of hope. The Centers for Medicare & Medicaid Services is dedicated to improving interoperability and patients’ access to health information through its Promoting Interoperability program. The agency’s push for moving health towards EHR has the potential to be pivotal if the industry uses blockchain or a similar technology to improve patient access to health information.

Blockchain may not be a today solution—it will take time to change state and federal laws regarding health information to facilitate such technology. However the promotion of initiatives encouraging use of EHR, may be priming the industry’s palate to provide a place for blockchain in the future.

Since the inauguration of President Trump, the Affordable Care Act (ACA) has taken quite a few significant jabs and blows. When Congress failed to repeal the ACA, Congress instead eliminated the individual mandate penalty through the GOP tax bill. The individual mandate penalty was one of the main pillars of the ACA because it effectively widened the pool of participants who buy health insurance in order to keep costs down. While removal of this penalty hit the ACA where it hurt, the true threat to the stability of the ACA arose when the Trump Administration announced that it would no longer defend the ACA against a challenge filed by twenty states that believe the individual mandate itself is unconstitutional and that key parts of the act are invalid. What is the outlook for the ACA?

Congressional Efforts to Repeal

The House has voted to repeal or amend the ACA at least 50 times, but their efforts have never made it past the Senate. Despite this history of failure, there are still Republicans pushing for the repeal of the ACA.  On June 19, 2018, a coalition of conservatives released the outline of a new plan for repealing and replacing the ACA. The plan emphasizes the use of block grants, implementing risk pools, removing essential health benefits, and minimum loss ratio requirements.  As it stands, the plan will likely succumb to the fate of its predecessors.  Even if the bill passed the House, there are fewer Republicans in the Senate than the last time the repeal went to a vote. However, if after the upcoming mid-term elections the Republicans win Senate seats in Montana and Missouri and keep the majority in the House, the ACA could truly be in jeopardy.

Lawsuits

Meanwhile, twenty states have filed a lawsuit against the ACA’s individual mandate arguing that the elimination of the tax penalty without the elimination of the mandate is unconstitutional because it leaves the mandate without the exercise of Congress’s taxing power. The Supreme Court’s 2012 ruling may come back to haunt ACA proponents. The Supreme Court held that the individual mandate is constitutional because it constitutes a tax and that the ACA could not function without the mandate in place. Those filing suit argue that because the tax penalty is eliminated it is a tax-less mandate and thus unconstitutional because Congress cannot exercise its taxing power. As such, the mandate is such a key provision that the whole ACA should be thrown out if the provision cannot be severed.  In other words, the whole cannot exist without the entirety of its parts.

States Embrace Medicaid Expansion

Amid the slew of blows taken by the ACA, there is one provision left unscathed—Medicaid expansion.  The number of states expanding Medicaid continues to grow. For example, Virginia recently passed an expansion of Medicaid, and the Governor of Utah signed a Medicaid expansion bill.  Interestingly, some Republican-leaning states have embraced the expansion due in part to the current Administration’s support of work requirements. In fact, Maine is currently in a dispute with its Governor about the implementation of the expansion of Medicaid that was approved by Maine voters.

The Outlook

With the ACA constantly under attack from multiple vantage points, it is safe to say that the Act will have to fight to survive. Although heavily dependent on the November elections, it is possible that the ACA will survive additional congressional efforts to repeal the bill.  Further, the popularity of Medicaid expansion would make it difficult to repeal the bill in its entirety. More states are embracing Medicaid Expansion, and there is evidence available of the positive effects expansion has on access to care. The survival of the ACA really hinges on how U.S. District Judge Reed O’Connor interprets the law as he presides over the twenty-state suit, especially considering that the Trump Administration has already stated that it does not intend to defend the ACA. Stakeholders will have wait patiently to see how the outcome of the upcoming elections and the pending lawsuit will affect the ACA’s future.

Eighty years ago today, President Roosevelt signed the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).  In recognition of this anniversary, EBG reviews how the FD&C Act came to be, how it has evolved, and how the Food and Drug Administration (“FDA”) is enforcing its authority under the FD&C Act to address the demands of rapidly evolving technology.

I’m Just a Bill

The creation of the FD&C Act stems from a sober event in American History.  In 1937, a Tennessee drug company marketed elixir sulfanilamide for use in children as a new sulfa drug.  The diethylene glycol (“DEG”) used as a solvent for the elxir is poisonous to humans.  The untested drug killed over 100 people, including children.  The public’s response to the disaster prompted and ensured the passage of the FD&C Act in 1938, which included the creation of the process known as pre-market approval, requiring that new drugs be proven safe before going on the market.

Growing Pains and Milestones

Since 1938, FDA’s jurisdiction has expanded as various public health emergencies and other challenges faced by the health care system have caught national attention.  Among the many legislative acts passed over the years, the following are of particular relevance to current developments:

(1) Food Additives Amendment of 1958, addressing safety concerns over new food additives and implementing generally recognized as safe (“GRAS”) requirements;

(2) Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman” Act), establishing the modern generic drug approval system;

(3)  Nutrition Labeling and Education Act of 1990, granting FDA authority to require nutrition labels on most foods, and compelling FDA-compliant nutrient and health claims;

(4) Safe Medical Device Amendments of 1990, giving FDA post-market device surveillance authority and device tracking capability at the user level;

(5) Dietary Supplement Health and Education Act of 1994, defining “dietary supplement” and establishing a regulatory framework for such products;

(6) Food and Drug Administration Modernization Act of 1997, making changes to several FDA regulatory schemes, including biologics, devices, pharmacy compounding, food safety and labeling, and standards for medical products;

(7) Food and Drug Administration Amendments Act of 2007, authorizing FDA to require a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that drug benefits outweigh risks;

(8) Family Smoking Prevention and Tobacco Control Act of 2009, expanding FDA authority over manufacturing, distribution, and marketing of tobacco products;

(9) Drug Quality and Security Act of 2013, expanding FDA’s authority to regulate the manufacturing of compounded drugs as a reaction to a meningitis outbreak caused by contaminated compounded drug products; and

(10) 21st Century Cures Act of 2016, creating the Breakthrough Devices Program, the Regenerative Medicine Advanced Therapy Designation, and exempting certain software products from the definition of “medical device.”

An Old Dog Learning New Tricks

Over the last few years, FDA has felt the impact of and the need to respond to several societal developments.  The country is calling for the government to address drug prices and to gain better control over access to drugs containing controlled substances, such as opioids.  The surge in development of new technology has forced FDA to adapt its historically rigid device regulatory structure to accommodate innovations such as regenerative medicine therapies.  A renewed public focus on the nutritional value of food requires updates to nutritional labeling and food safety regulations, and the new “vaping” trend raises questions surrounding the sale and promotion of new tobacco products.  Across all of these developments, there is a trend toward more focused regulatory pathways that take into account the particular needs and challenges of specific product categories.  Many of these changes are either required or authorized by legislation, such as the 21st Century Cures Act; and statements by the agency, as well as numerous new draft and final guidance documents, give indications as to where FDA is headed in the next few years.

A. Drugs

Increasing Market Competition and Access: FDA is focused on increasing market competition for and patient access to prescription drugs. In furtherance of its Drug Competition Action Plan, the agency published a draft guidance to address the exploitation of REMS and prevent problematic pay-for-delay schemes. In the same vein, FDA implemented a Biosimilar Innovation Plan to facilitate development and approval of biosimilars, hoping to increasing patient access to costly biologics. Last week, FDA also withdrew its draft guidance on biosimilar analytical studies, announcing intent to issue a revised draft guidance in the future.

Drug Development Efficiency: Recent FDA publications also suggest that the agency is prioritizing a more streamlined drug development process. In February 2018, FDA released five guidance documents emphasizing a faster, patient-focused approach for drug development for neurological conditions. In March 2018, FDA updated its benefit-risk framework to further incorporate patient experience into the agency’s regulatory decision-making process. FDA published the first of four of its patient-focused drug development guidances on June 13, 2018.

In response to the opioid crisis, FDA is focusing heavily on changes to the drug compounding and controlled substance space. In March 2018, FDA published a draft guidance on evaluation of bulk drug substances nominated for inclusion in the 503(B) bulks list, requiring a showing of clinical need. FDA also plans to issue notice of proposed regulations for outsourcing facilities later in 2018.  FDA held a Patient-Focused Drug Development Meeting for Opioid Use Disorder in April 2018 and published an associated draft guidance on buprenorphine drug development and clinical trial design issues. We expect to see more FDA movement on drug development as the year progresses, particularly with respect to opioid use disorder treatment therapies.

B. Devices

Streamlining the Device Pathway: FDA continues to implement changes to the regulatory pathway for manufacturers to bring their devices to market.  Per a draft guidance released in April 2018, the agency is expanding the abbreviated 510(k) pathway by creating a voluntary option for manufacturers when there is no acceptable predicate for a new device, but there is another device with the same intended use.  Manufacturers will be able to use the similar device as a “predicate” and demonstrate how their product conforms to newly-developed device-specific objective performance criteria.  While these performance criteria are still under development, they will eventually pave the way for more manufacturers to bring their products to market faster.

Precision Medicine: The national focus on precision medicine has encouraged many manufacturers to develop new products that incorporate genomics-based technology.  FDA is encouraging development of next generation sequencing (“NGS”)-based tests, which analyze larger sequences of the human genome, if not the whole genome, for a variety of different genetic variants.  FDA released two final guidance documents in April 2018, making recommendations on (1) the design and development of a NGS-based test for germline diseases and (2) use of public human genetic variant databases to support clinical validity of NGS-based tests and routes for establishing and justifying algorithms for variant annotation and filtering.

FDA is also evaluating its approach to the regulation of gene therapy products. Commissioner Gottlieb stated that the agency is at “an inflection point” with gene therapy thanks to increased reliability of vectors.  The focus has shifted from the efficacy of gene therapy to its durability, i.e. the long term effects of the treatment.  Recently, Commissioner Gottlieb announced FDA’s intent to start developing gene therapy guidance for products intended to treat hemophilia.

Regenerative Medicine: In efforts to implement its comprehensive policy framework for regenerative medicine and respond to certain provisions of the 21st Century Cures Act, FDA intends to create an expedited regulatory pathway for novel regenerative medicine therapies.  FDA is also actively enforcing against stem cell clinics promoting certain regenerative medicine therapies without approval and in violation of current good manufacturing practices.

Software and Artificial Intelligence (“AI”): In acknowledgment of the current “digital age,” FDA published a Digital Health Innovation Action Plan.  In April 2018, FDA released two policy documents – (1) a working model for the Digital Health Software Pre-Certification (Pre-Cert) Program Pilot and (2) guidance on regulation of digital health products with both FDA-regulated and unregulated functions.  Also in 2018, FDA authorized the marketing of AI-based clinical decision software (“CDS”) that functions to alert specialists when computed tomography (“CT”) indicates a potential stroke, as well as an AI algorithm for detection of wrist fractures.

C. Food

Food Safety: Since the Food Safety Modernization Act (“FSMA”) was passed, sixteen rules and dozens of guidances have been released (many of which have been in the last two years), bringing the law close to full implementation. These rules and guidances address the mandatory preventive controls for food manufacturing facilities; mandatory product safety standards; FDA’s new mandatory food recall authority; and the initial required inspection of over 600 foreign facilities and the subsequent requirement to “double those inspections every year for the next five years.” In light of the recent high profile foodborne illness outbreaks at chain restaurants and attributed to romaine lettuce, the agency is hoping the full implementation of the FSMA rules, in tandem with keeping food safety as a high priority for the agency, will minimize the risk of future outbreaks.

Nutrition: In 2018, the agency launched the FDA Nutrition Innovation Strategy, which, in addition to implementing new Nutrition Facts Label and Menu Labeling requirements, demonstrates that the agency is looking for more ways to modernize food labels and standards of food product identity to help consumers make healthier decisions. FDA also plans to release short-term voluntary sodium targets for food products in 2019.

Food Labeling: FDA issued a guidance in 2016 on the use of the term “healthy” in food labeling, and continues today to seek stakeholder input on how to redefine the term in such a way as will keep up with scientific advancements and help consumers understand what is in their food products.  FDA is also reviewing stakeholder input on how to define “natural,” and indicated in March 2018 that the agency will “have more to say on the issue soon.”

Dietary Supplements: The dietary supplement industry is a growing industry, and consumers are more interested in alternative products to promote wellness lifestyles. The industry is considered by some to still be the “wild wild west” in terms of enforcement, but FDA seems to be putting its foot down on companies making unsubstantiated claims about dietary supplement products or making claims that would otherwise classify the product as a drug.

D. Tobacco Products

Using its authority to regulate all tobacco products, FDA is addressing the rise in the use of vapes, vaporizers, pens and electronic cigarettes by children.  In April 2018, Commissioner Gottlieb announced the intent to issue new enforcement actions against bad actors, as well as to implement a Youth Tobacco Prevention Plan, seeking to reduce the amount of children exposed to e-cigarettes and vapes and those manufactures who target children with enticing flavors.   In May 2018, Commissioner Gottlieb stated “If you target kids, then we’re going to target you.”  FDA is also in the process of developing guidance for the development and regulation of e-cigarettes generally, suggesting that e-cigarettes could fall into the over-the-counter pathway due to their potential role in smoking cessation, and is reviewing the toxicology of the products.

Andrew Do, a Summer Associate (not admitted to the practice of law) in the firm’s Washington, D.C. office, contributed  to the preparation of this post.

Faced with the inability to repeal the Affordable Care Act (“ACA”) outright, the Trump Administration and Congress have taken actions to provide more health insurance options for Americans.  Thus far, the Administration announced that they would no longer make cost sharing reduction (“CSR”) payments to insurers on the Exchanges and extended the time period in which short-term, limited-duration insurance (“STLDI”) plans could be offered.  Meanwhile, Congress removed the individual mandate in the 2017 tax bill. The Administration asserts that these efforts are all solutions geared toward helping more Americans receive care as premiums are rising.  A March 28, 2018 Gallup poll showing that health care costs are a higher concern for Americans, over the economy supports the Administration’s asserted justification. However, some states have recently taken their own steps to provide more health coverage options for their citizens while discounting the ACA, possibly reflecting a sense of dissatisfaction with the seemingly dragging feet of the Federal Government.

Idaho

The Governor of Idaho released an Executive Order on January 5, directing the Idaho Department of Insurance to approve options that follow all state-based requirements, even if not all ACA requirements are met, so long as the carrier offering the option also offered an exchange-certified alternative in Idaho and authorized the Director of the Department of Insurance to seek a waiver from the U.S. Department of Health and Human Services in conjunction with this Executive Order, if the Director believed it is appropriate or necessary.

Idaho officials then released Bulletin No. 18-01 on January 24, which provides new provisions for “state-based plans” for those individuals who do not qualify for premium subsidies under the ACA. Under Idaho’s proposal, insurers would be allowed to (1) sell plans with 50% higher premiums for people with pre-existing conditions; (2) exclude coverage for pre-existing conditions for people who had a gap in coverage; (3) vary premiums by 5-to-1 based on age; (4) exclude coverage for some ACA essential benefits such as maternity care; and (5) set a $1 million annual cap on benefits. All of these provisions are prohibited by the ACA.

In February, Idaho sought approval for the Bulletin by Center for Medicare and Medicaid Services (“CMS”); however, CMS denied the proposition. CMS Administrator Seema Verma wrote a letter stating that Idaho’s proposed requirements are not in compliance with the ACA and warned that, if Idaho did not enforce the ACA standards, CMS would be forced to step in and directly enforce the ACA protections in the Idaho market.  If any health insurance issuer that is subject to CMS’s enforcement authority fails to comply with the ACA requirements, it may be subject to civil monetary penalties for each violation of up to $100 each day, for each responsible entity, for each individual affected by the violation.  Despite the response from CMS, Idaho still seeks to expand coverage options for Idaho residents.

Iowa

In a similar fashion, Governor Kim Reynolds urged the Iowa legislature to make health insurance affordable for Iowa residents in the Condition of the State Address.  On April 2, the Governor signed into law a bill that allows small businesses or self-employed individuals to band together to buy coverage through association health plans that do not comply with ACA plans.  The legislation would allow insurers to deny coverage to those with pre-existing conditions, create lifetime caps, and does not offer maternity care.   However, proponents of the bill emphasize that the coverage would not be considered insurance, but rather would simply function as a “health benefits plan”.  Proponents also note that these plans are cheaper alternatives for small employers or the self-employed.

Key Takeaways

States creating affordable health coverage with blatant disregard for the ACA is a note-worthy development in today’s tense healthcare climate. The outcome of the push of these initiatives by states is crucial because they are challenging the Administration’s willingness to enforce the ACA. Tolerance of such state plans would lead to cherry-picking, which would inevitably cause further destabilization of the market. Notably, CMS and Secretary of Health and Human Services Alex Azar have each emphasized upholding ACA as the law of the land. Stakeholders should pay attention to the outcome of these proposals because not only would the implementation of these plans destabilize markets, but the plans could also incentivize more states to follow suit and create their own plans.

In the last couple of months, ballot initiatives have significantly affected health policy and the health industry as a whole. Constituents are becoming more involved in policy matters that have traditionally been left to elected officials in state legislatures. On January 25, 2018, Oregon held a special election for a ballot initiative that asked whether Oregonians would support funding the state Medicaid program by taxing health plans and hospitals. The ballot initiative passed with a margin of 62 percent of voters supporting the measure. The measure proposed a 1.5 percent tax on insurance premiums and a .7 percent tax on large hospitals to help fund Medicaid expansion. Proponents argued that 350,000 people who receive health coverage through Medicaid expansion would lose coverage if the measure was not supported.

Oregon is not the only state that has used a ballot initiative to substantially affect health policy. On November 7, 2017, Maine was the first state to use a ballot initiative to expand Medicaid coverage. The ballot measure overwhelming passed without the support of the Governor. The Governor is now withholding the implementation of the measure due to fundamental issues on how to fund Medicaid expansion.

Traditionally, ballot initiatives are frequently used to amend state constitutions or topics regarding public health. Health policy issues such as Medicaid and funding for health care seldom had direct input from constituents. However, as many states are faced with one party legislature, ballot initiatives have become a way to circumvent the traditional means of legislating. Constituents are actively using ballot initiative to help shape policy issues that directly affect the health industry. About 24 states have ballot initiative processes that allow constituents to bypass state legislatures by placing proposed statutes on the ballot. Although states have different processes, a ballot initiative requires a specific number of signatures for an initiative to be placed on a ballot. In states with an indirect initiative process, such as Maine, ballots with enough signatures are submitted to the legislature where elected officials have an opportunity to act on the proposal. If the legislature rejects the measure, submits a different proposal or takes no action, the measure goes to the ballot for a vote. In states with direct initiatives, such as Oregon, proposals go directly on the ballot for a vote.

With the success of Oregon and Maine, other states may utilize the ballot initiative process to substantially change health policy in their state. For example, after years of failing to expand Medicaid in Utah, advocates have already begun to gather signatures needed by April 15, 2018 to put Medicaid expansion on the 2018 ballot. Additionally, advocates in Idaho have filed paperwork for a ballot initiative to expand Medicaid.

As more states consider ballot initiatives as a legislative tool for health policy, stakeholders should not only look to legislative assemblies for changes in health policy but ballot initiatives that can affect the industry. Grassroots advocacy has always played a major role in shaping state policy and now substantial health policy can be added to the list.

On December 14, the Federal Communications Commission (FCC) voted to remove regulations that prohibit providers from blocking websites or charging for high quality service to access specific content. Many worry that allowing telecommunications companies to favor certain businesses will cause problems within the health care industry. Specifically, concerns have risen about the effect of the ruling on the progress of telemedicine and the role it plays in access to care. Experts worry that a tiered system in which service providers can charge more for speed connectivity can be detrimental to vulnerable populations.  Although the ramifications of the ruling are not entirely known, an exception for health care services would ensure that vulnerable populations can continue to gain access to care.

Telemedicine is often used as a tool to improve care by providing access to those who wouldn’t ordinarily have access to care. Through video consultation, patients have the ability to check-in with health care providers and access health specialists. Robust connectivity is vital for these services and community providers, and rural areas may lack the financial means to pay for optimal connectivity in a tiered framework.

In the past, the FCC recognized the importance of broadband connectivity to the health care industry. In 2015, the FCC‘s Open Internet Order acknowledged that health care is a specialized service that would be exempt from conduct based rules.  However, the new rule may undermine the 2015 Order and thus leave vulnerable populations at risk.

Moreover, the technology industry would likewise benefit from a health services exception. Innovation in health care delivery could be stifled by the FCC ruling and hurt the population as a whole. From tech start-ups to access-to-care advocates, various members of the health care ecosystem may need to anticipate building coalitions and urge the FCC to create an exception for health care services.

In response to Republicans’ failure to repeal the Affordable Care Act (ACA), the Trump Administration is using administrative action to modify the ACA and health insurance options for Americans. On October 12, 2017, President Trump signed an executive order that instructs various departments to consider regulations related to association health plans and short-term insurance. Shortly after, the Administration announced that they would no longer make cost sharing reduction (CSR) payments to insurers on the Exchanges.  Section 1402 of the ACA requires insurance companies to reduce the amount that eligible low-income policyholders pay out of pocket for co-payments and deductibles.  Accordingly, the federal government must reimburse insurers for reductions when the Secretary of HHS is notified.

Without these payments, insurers will either increase premiums or pull out of the Exchanges altogether. In anticipation of the announcement, some insurers have already increased premiums for the 2018 enrollment period. In spite of this, policy makers can mitigate the harm that could be felt as a result of not funding CSR payments.

The Passage of the Murray-Alexander Stabilization Bill

Senator Lamar Alexander (R-TN), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP) and Ranking Member Senator Patty Murray (D-WA) revealed a bipartisan plan to help stabilize the insurance market. The Murray-Alexander Bill seeks to stabilize the insurance market by funding the CSR subsidies and increasing state flexibility in their administration of the Marketplace.

The bill proposes to fund CSR payments for the remainder of 2017, as well as 2018 and 2019. The bill also reduces the time for the Center for Medicare and Medicaid Services (CMS) review of 1332 waivers, from 180 days to 90 days and creates a new 45 day expedited review process for qualifying circumstances. Through Section 1332 waivers, states are allowed to implement insurance market innovations that provide coverage “comparable” in benefits and affordability.

The Congressional Budget Office (CBO) scored the Murray-Alexander Bill and found that it would cut the federal deficit by $3.8 billion in the next decade. The CBO notes that savings would come from states offering lower-cost policies, attracting younger and healthier individuals into the market.  Insurers would lower their premiums because of the influx of younger individuals and in the long-term, save the government more than $1.1 billion in premium tax credits. Despite the savings scored by CBO, the Murray-Alexander bill will not have an affect on 2018 plans. Further, the bill may not pass before open enrollment ends on December 15.  The bill has bipartisan support in the Senate, but will have difficulties in the House because of Speaker Paul Ryan’s opposition to the current version.

State Efforts

States can play a role in telling insurers where to apply their premium increases. For example, states could tell insurers to apply premiums to only Silver marketplace plans, all metal level plans inside and outside the marketplace, or all Silver plans inside and outside the marketplace. About 30 states assumed that CSR payments would not be disseminated and either encouraged or required states to increase premiums onto marketplace silver plans only. States that choose this option allows consumers in the marketplace to receive premium tax credits and consumers outside the marketplace to not experience any increase in premiums. Additionally, some legal scholars and health policy experts argue that states could pay for the premium themselves and then bill the federal government.

Legal Challenges

Eighteen states and the District of Columbia sued the Trump Administration seeking an immediate injunction to block President Trump from ending CSR payments to insurers. California federal judge, U.S. District Judge Vince Chhabria, denied the motion for an injunction.  Judge Chhabria argued that states had enough time to plan for the end of the cost-sharing payments and adjusted accordingly. Although Judge Chhabria has denied the injunction, California Attorney, General Xavier Becerra, will still proceed with the lawsuit.

Despite the Trump Administration’s attempt to unravel parts of the ACA, states and Congress are working to anticipate more downstream impacts and must act to find solutions or ways to mitigate the issues that will arise for low-income policy holders.

Stakeholders should anticipate a continuation of unstable markets as insurers will have to adjust their rates or leave the Exchanges if there are no changes made to fund CSR payments. State regulators will have to use creativity and flexible ways to help their constituents.