Zac Schultz:

Republicans in Congress may have failed in their attempt to repeal the Affordable Care Act but the president is using executive orders to rewrite the law. On Thursday Donald Trump dropped two bombshells on Obamacare. First directing federal agencies to rewrite rules governing so-called association health plans, allowing smaller, cheaper plans to be sold unregulated across state lines. Then Trump announced his administration would no longer make federal payments for cost-sharing reductions. Those are the $7 billion sent to insurance companies to help subsidize insurance premiums for low-income families. In our first look tonight, we are joined by Bobby Peterson, Executive Director of ABC for Health to talk about all these changes to Obamacare. Thanks for your time today.

Bobby Peterson:

Glad to be here.

Zac Schultz:

What does the end of cost-sharing reduction payments mean to the health care markets?

Bobby Peterson:

Well, it's going to destabilize things. It’s going to make it more difficult for insurance companies. They’re going to have to increase their rates. So I think that we see this as having a destabilizing effect on the marketplace. It actually extends more than just low-income folks. Family of four at $60,000 would be affected by this. So moderate income as well. It’s a real shot at the Affordable Care Act. But it was somewhat expected.

Zac Schultz:

Now, just yesterday Wisconsin's commissioner of insurance announced premiums for Obamacare plans would increase by 36% on average in this state. The good news in Wisconsin is Governor Walker instructed insurance companies to design those plans with the assumption of no cost-sharing reduction payments coming from the federal government. Since they’re not coming now, the 36% should be accurate. But 36% is still a big increase.

Bobby Peterson:

Right. And that’s an average. Probably 20%, 25% of that might be related to the fact that those cost-sharing reductions were eliminated. So it’s not like we’re going to see 20% on top of the 36%. It’s still unfortunate. But the thing to remember too, is that most of the people will not be directly affected by this in a significant way because they’ll still be eligible for the affordable tax credits and those will help mitigate against some of the increases. Sadly, there will be more expenses to the federal government to provide those tax credits.

Zac Schultz:

Moving on the executive order on the association health plans, those are typically used by small businesses that group together to negotiate their benefits, but the executive order will let them sell across state lines without the incoming state having a say in what’s in the plan and potentially let individuals buy it. What does that do?

Bobby Peterson:

I think it's part of the crazy quilt of the insurance marketplace that we have and it makes it even crazier. In Wisconsin when we think about how insurance is regulated, there’s people that have insured plans that you have a traditional insurance company that covers you. Your employer contracts with the insurance company. They provide insurance. Large employers may self-insure, so those types of plans aren’t regulated by the state of Wisconsin. The new association plans will look more like large employer plans, that aren’t regulated by the state, that are able to sell across state lines. They’re self-funded plans. And that means people can offer less quality plans, plans that are cheaper, but you know, you get what you pay for. And it’s unfortunate because a lot of people will potentially purchase plans like this and they’ll end with really poor insurance.

Zac Schultz:

Now, another big change that happened before these last two big changes was that some of the change in the navigator money that’s being put out there that helps people find the right plan for them on the ACA marketplace. Funding has been reduced from $62 million to $37 million. In Wisconsin, it’s a 44% decrease, down to about $750,000. How does that impact people who are trying to find plans?

Bobby Peterson:

Well, there’s less help available. And it’s unfortunate because as I was just describing, this stuff is complicated. Let me just say that the executive orders don’t take effect immediately. There has to be agency study, a rule-making process. So none of this is going to happen until most likely into 2018 at some point. So it doesn’t affect anything right now immediately. But the navigator funding, I think that’s really critical because we know that as health care is very complicated, that people have questions. They need help. They need guidance. They need help with the paperwork. They have appeals. They need outreach and education on how it works. And when that gets more limited, it means that people have less help. And then what happens, people don’t get the coverage that they need. Uncompensated care rises. And that affects everyone.

Zac Schultz:

Now, going along with reducing the amount of money for navigators, Trump Administration has also reduced the amount of money for advertising to let people know when the enrollment period starts from $100 million to $10 million. So give them some help. When does it start?

Bobby Peterson:

It starts on November 1 and runs through December 15. It’s a very shortened period of time for open enrollment. Much shorter than it used to be. The Trump Administration also scaled back hours of operation. Every Sunday, they’re going to be down for maintenance. On weekends, when people may have time for this, they’re going to be largely closed. So it’s a series of efforts to destabilize the marketplace, in my view, that will hurt consumers. They’re providing opportunities for less expensive coverage, but it's part of market segmentation that most insurance commissioners don’t like. They don’t want to have plans they don’t have an opportunity to regulate at some point to make sure they’re up to standards. This is kind of the wild, Wild West of insurance. We’re going back to the bad old days of insurance. I represented people in some of these plans 30 years ago. And they’re bad. Preexisting conditions, post-claims underwriting. I had a client that had a — was suffering from headaches, went in to see her doctor, — bought one of these short-term policies they’re proposing in the executive order, ended up buying insurance but went back to the doctor later to find out she had a brain tumor. People might say that was a preexisting condition. She reported her condition on her application accurately. “I went in to see my doctor. I had headaches.” The doctor said, “No, you’re suffering from anemia.” That’s the kind of thing we’re looking at. Where people get the surprise, big medical bills. You buy insurance but it’s not going to cover most of the things you need.

Zac Schultz:

Trump has repeatedly said, especially with some of the failures in Congress to repeal the ACA, he’s willing to “let Obamacare fail on its own.” Democrats are calling this outright sabotage.

Bobby Peterson:

Well, I mean, he’s pushing it. He's pushing it over the cliff in some ways. And we’ll see how much–it was showing signs of stability earlier in the year. But he’s taken all the steps that we’ve talked about here: executive order, reducing cost-sharing. Those are all things that destabilize the marketplace. And you’re going to destabilize the risk pools out there. You’re creating small risk puddles of small groups that don’t follow the ACA standards. People are going to get sick. They’re going to drive up health care costs because they’re going to get uncompensated care at the hospitals. That was a billion dollars last year in Wisconsin. That’s a billion dollars that gets spread into everybody else’s bill. Back in 2014, when the ACA first started, it was $1.5 billion. We’ve knocked it down to near half a billion dollars in the state. It’s going to go back up again and that spreads into everybody else’s health care costs.

Zac Schultz:

Politically, a lot of people are looking at this as who’s going to own this situation? Who can blame? Who can profit electorally? But in terms of people, how will this unsettle people and what should people be looking for right now?

Bobby Peterson:

Well, I think people need to just stand firm. There are opportunities out there for coverage. The ACA has not gone away. There are opportunities to get coverage either through the ACA, through BadgerCare Plus, through other programs that might be able to help you. It’s really unfortunate because we see parts of our government using fear and greed to really unsettle people. And a lot of folks out just want to make sure they get health care for themselves and their family members. I think they understand that part of this is we’re all part of a group. We’re all part of a pool at some point. We do have to help each other out at some points. But if you exploit issues of greed, where people say, “I don’t want to have to pay for someone that’s sick.” It’s the wrong message. It’s about the community of people we live with. In the same way that we share our schools, roads, libraries. Healthcare is something fundamental that we need to think bigger about it. And our politicians are pushing us to think smaller.

Zac Schultz:

All right. We’ll have to leave it there. Bobby Peterson, ABC for Health, thanks for your time.

Bobby Peterson:

You're welcome.

Zac Schultz:

People without insurance still seek medical treatment. They just usually do it when they’re very sick and often can’t pay their bills. In tonight’s closer look, we’re looking at the cost of uncompensated care for Wisconsin's hospitals, which approached a billion dollars in fiscal 2016 and it’s expected to rise going forward. Joining us now is Brian Potter, Chief Operating Officer of the Wisconsin Hospital Association. Thanks for your time today.

Brian Potter:

Thank you.

Zac Schultz:

Now the latest numbers show in fiscal year 2016, it was $994 million in uncompensated care, half written off as charity and half as bad debt. Is that just people who can’t pay their bills or how do you decide what goes in which category?

Brian Potter:

Right. It is people that can’t pay their bills. Things like payer discounts, government payments and under-funding, those are in different categories. It is people that can’t pay their bills. It really falls into two categories. One is charity care, and that tends to be people that don’t have insurance, and they also qualify for hospitals’ financial assistance policy. Those tend to be pretty generous. Usually up to about 200-250% of the federal poverty limit, the hospital generally forgives the bill. And then, above that they can go up to 400-500% where there’s a sliding scale of write off. That tends to be in your charity care bucket. The bad debt piece can either be people without insurance, who don’t meet the financial assistance policy or more, kind of, more going forward, it tends to be more people that are insured but they are either underinsured or they have high deductibles and co-pay and those types of things, so they might have insurance, but if they’re paying first dollar on some of those things and if they can’t make their payment, then the hospital would have to write that off as bad debt.

Zac Schultz:

The report is predicting a 4% increase for 2017, but that was before we knew about these latest batch of changes to the Affordable Care Act. Should we expect that to rise beyond 4%?

Brian Potter:

Well, you know, your guess is as good as mine. A lot of things have changed just in the last week or so. I think when the survey was done, it was more about probably that bad debt piece, about health insurance plan designs changing and the continuing high deductible type plans, we’re seeing more and more of those. I think that has a lot to do with it. Some of this uncertainty with the ACA and those types of things probably isn’t factored into this.

Zac Schultz:

Some of those plans–you talk about the association health plans that just were introduced that will be expanded and possibly be available to individuals, some of those are deliberately underinsured. People don’t have as much coverage in those plans.

Brian Potter:

That's kind of the struggle with the ACA. I don’t think the young healthies have come in to the extent they were hoping. And so I guess it all kinda depends on if these new plans get people that previously didn’t have insurance to go into those, that could be a good thing. However, if they’re taking them out of the exchanges and into those plans, then you’re just increasing the risk pool of those that are left in the ACA. And then you’ll see higher premiums and those types of things. So there’s really kind of a delicate balance. This all has to work together. Right now it seems like there’s a lot of ideas coming together that aren’t really well-formulated yet. Still a lot of work to do.

Zac Schultz:

Before Obamacare was fully ramped up, uncompensated care in Wisconsin was around $1.5 billion. It’s come down to under $1. But now it’s creeping back up and is it safe to say we’re going to keep rising if there’s this much uncertainty?

Brian Potter:

Definitely possible. Yeah, the ACA had a very positive impact on uncompensated care as you might expect. Uncompensated care is heavily correlated to the number of uninsured. So as those numbers of uninsured–and I think in Wisconsin we saw uninsured drop by over 200,000 people. So a great thing from an access to coverage component. However, again, if that starts to fall apart, uncompensated care would rise. I think another important piece to understand is though when the ACA was started, one of the major funding mechanisms, because obviously there was an increased cost, was pretty significant Medicare cuts to fund that. While we’ve seen uncompensated care come down, we’ve seen Medicare losses go up. So purely from a financial perspective of a provider, it’s been maybe slightly positive, but kind of a wash. Obviously great for people that are able to afford coverage.

Zac Schultz:

And the overall impression is that with uncompensated care, other people’s premiums rise to make up that difference. Is that fair?

Brian Potter:

Well, it’s a cost just underfunded government programs are a cost. So those need to be made up somewhere. Milliman does a study for the Greater Milwaukee Business Foundation on health every year which looks at this impact in southeastern Wisconsin. I think they estimated about 30% of the cost of commercial insurance is due to government and uncompensated care underfunding. That’s what they estimate. So obviously, there is a cost to that.

Zac Schultz:

One element of reducing the CSRs, the cost-sharing reductions, is that people on the lower end of the income levels that have to get into the marketplace may not be able to afford their coverage. They may not be able to afford the deductibles within them. Would those people typically qualify for some of this charity care? Are they aware it may be there?

Brian Potter:

Possibly. With these cost-sharing reductions that gets to be a little interesting because for those around the 100% poverty level, the subsidies, those are kind of baked in. So I don’t know how much that will affect the affordability for the really low income. Those that are a little bit higher up, that are getting their coverage for the exchanges, it could have a big impact. And so again, this is all developing now. But it’s obviously going to have an impact in that it makes a lot of people, including providers, really kind of concerned.

Zac Schultz:

No one likes uncertainty in any marketplace. Do people know what to expect? Have you been getting calls already or do you expect them?

Brian Potter:

Well, I don’t think anyone knows what to expect. It’s interesting though because Wisconsin, as part of Governor Walker’s plan to reduce the uninsured rate — and it’s worked quite well — he increased Medicaid coverage to childless adults up to 100% federal poverty level and then used the exchange to get the additional coverage. Like I said, that brought down the uninsured rate by — about 200,000 people got coverage. However because that’s a major focus of Wisconsin's plan, if the ACA starts to crumble, obviously that’s going to have to be reevaluated because we’re going to lose the gains that we gained through this enhanced coverage.

Zac Schultz:

All right. We have to leave it there. We’ll check in with you later. Brian Potter from the Wisconsin Hospital Association, thank you.

Brian Potter:

Thank you.