It’s Autumn, and amidst the crisp air and changing leaves is a bountiful harvest of new health policy research. In September, we read studies about state health system performance, differences in health care spending between Medicare and private payers, and deceptive insurance marketing practices.

Radley, D, et al. 2020 Scorecard on State Health System Performance. Commonwealth Fund, September 11, 2020.

Researchers at the Commonwealth Fund assessed all states on 49 measures of access to health care, quality of care, service use and costs of care, health outcomes, and income-based health care disparities. In addition to state rankings, researchers also examined racial and ethnic inequities between white people and communities of color, including disparities related to care access, quality and health outcomes.

What it Finds

• The top ranked states (in order) are Hawaii, Massachusetts, Minnesota, Iowa, and Connecticut. The lowest ranked states (in order) are West Virginia, Missouri, Nevada, Oklahoma, and Mississippi.
• While the uninsured rate in the U.S. fell between 2014-2016 (after the Affordable Care Act’s (ACA) major reforms went into effect) by at least 2 percent in every state, between 2016-2018 those gains stalled in 23 states, and began to erode in 22 states.
  • Four of the 12 states that have not expanded Medicaid under the ACA had among the highest adult uninsured rates in 2018.
• Although the percentage of adults who reported forgoing care due to cost fell in most states from 2014-2016, after 2016, adults in 21 states reported experiencing little or no improvement in access to care, and the share of adults forgoing care due to cost rose in 15 states.
• Racial and ethnic inequities in access to coverage and quality of care have persisted despite ACA expansions, and are currently at risk of worsening.
  • In 17 states, there was at least a 5-percentage point disparity in the uninsured rate between white adults and both Black and Hispanic adults.
• Compared to Medicare rates, commercial insurers paid more for inpatient hospital care in every state, and higher employer coverage premiums were associated with higher commercial prices paid for health care services.

Why it Matters

As of September 2020, an estimated 35 million people in the U.S. are uninsured. This report finds that these rates vary significantly by region, largely due to state-level differences in the implementation of the ACA, and clearly illustrates that we have a long way to go in ensuring access to comprehensive and affordable coverage. With a case pending before the Supreme Court that could overturn the ACA, and a dearth of contingency plans if the law is struck down, policymakers at the state and federal level will have to weigh not only the coverage gains that could be lost, but existing gaps and disparities in the current system, and how to make up for the lost ground in recent years.

Whaley, C, et al. Nationwide Evaluation of Health Care Prices Paid by Private Health Plans. RAND Corporation, September 18, 2020.

RAND Corporation researchers documented and evaluated variations in hospital spending between 2016-2018 between private payers (including insurers and employers) and Medicare, reporting differences in negotiated prices for the same procedures and facilities as “relative prices” using Medicare as a benchmark. The authors then recommend strategies employers can use to address high hospital prices.

What it Finds

• On average, employers and private insurers paid 240 percent of what Medicare would have spent on equivalent hospital inpatient and outpatient services from 2016-2018. This amounts to an estimated $19.7 billion in excess expenditures.
• From 2016-2018, the overall relative price for all hospital procedures and services increased from 224 to 247 percent of Medicare, a 5.1 percent compounded annual rate of increase. At the state level, relative prices varied greatly in 2018, falling below 200 percent of Medicare in some states and above 325 percent of Medicare in others.
• There are “high-value” hospitals that offer low prices (less than 150 percent of Medicare) and high levels of safety and quality for services; 91 percent of lower-priced hospitals received three or more stars out of CMS’s five-star hospital quality ratings.
• The authors found no correlation between hospital prices and payer composition. These findings do not support the common rationale offered by hospitals that charging higher prices to private payers is necessary to offset underpayments by Medicaid and Medicare.
• The authors offer several strategies that employers can use to address high hospital prices, including:
  • Implement benefit design changes to offer employees incentives to use services offered by lower-priced providers, such as tiered networks and reference pricing (noting that less than half of all health care services are potentially “shoppable” and consumer-focused approaches should be paired with sufficient provider pricing information).
  • Use direct-contracting approaches with hospitals or health systems to leverage employers’ patient volume to achieve lower prices, or bundled payment arrangements in which providers bear the risk of excess costs, providing incentives for cost restraints.
  • Support state and federal policy interventions that offer employers increased negotiating leverage, such as limits on payments for out-of-network care, including restrictions on what hospitals can charge patients in these scenarios, or all-payer and global budget programs.

Why it Matters

The rising cost of health care has serious consequences for employers and their employees, who shoulder much of the burden through higher premiums and out-of-pocket spending. Bridging information gaps is the first step in supporting employers in their bid to lower health care prices, and data from this report provide insight on how employers and private insurers pay significantly more for the same services compared to public payers. Employers struggling with high health care costs can take advantage of the increased price transparency that this report offers, as well as the strategies researchers suggest to combat higher costs and attain better value.

Private Health Coverage: Results of Covert Testing for Selected Offerings. U.S. Government Accountability Office, September 16, 2020.

During the 2020 Open Enrollment Period, the Government Accountability Office (GAO) conducted 31 covert tests to assess the marketing and sales practices of insurance representatives who sell ACA-exempt plans. This report outlines the results of each test, in which undercover GAO agents contacted sales representatives and requested help enrolling in a plan that offers coverage for specific pre-existing conditions.

What it Finds

• In 21 of the 31 tests, sales representatives appropriately referred GAO undercover agents to an ACA-compliant plan, generally explaining that the products they sold (such as short-term, limited duration insurance) would not cover the pre-existing condition described by the undercover agent, or that the pre-existing condition would disqualify them from coverage under the non-ACA-compliant plan.
• In 2 of the 31 tests, sales representatives did not engage in deceptive marketing practices, but were sometimes inconsistent or otherwise unclear in their explanations of the plans they sold, including a lack of transparency about the availability of free ACA-compliant plans based on income and refusal to provide plan documentation.
• In 8 of the 31 tests, sales representatives engaged in deceptive marketing practices by omitting or misrepresenting information about the plans they sold. Here, GAO undercover agents found that representatives would engage in the practices such as:
  • Omitting pre-existing condition information on an insurance policy application, facilitating the purchase of a policy that would not provide health care services related to the pre-existing condition, despite telling undercover agents they would receive such services;
  • Omitting information about limits and caps on benefits;
  • Lying about coverage of services that were later revealed to be excluded benefits; or
  • Describing coverage offered in several separate plans as part of one comprehensive plan

Why it Matters 

Since the Trump administration expanded the availability of non-ACA-compliant plans, evidence has emerged that these products, which often exclude coverage of pre-existing conditions and other key health services, are pedaled as a viable alternative to ACA-compliant plans. Although this GAO study examined only a small sample of sales calls, it exposes a concerning pattern of problematic marketing practices among sales representatives. It is important for federal and state regulators to ensure robust oversight and regulatory standards of these products to prevent harm to consumers and the markets.