Schaeffer Initiative for Innovation in Health Policy — DELETE FOR LAUNCH

USC-Brookings Schaeffer Initiative for Innovation in Health Policy

A partnership between the Center for Health Policy at Brookings and the Leonard D. Schaeffer Center for Health Policy & Economics, the USC-Brookings Schaeffer Initiative for Health Policy aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.


A Proposal to Enhance Competition and Reform Bidding in the Medicare Advantage Program
Medicare beneficiaries have the option of receiving health coverage either through “traditional” Medicare, in which the government directly pays providers for all covered services, or by enrolling in a private Medicare Advantage (MA) heath plan. Read the full report here

Medicare Advantage: Better Information Tools, Better Beneficiary Choices, Better Competition

Today, 1 in 3 of the 57 million Medicare beneficiaries are enrolled in private health plans, known as Medicare Advantage (MA) plans.[1][2] Although growth in Medicare per capita spending has slowed in recent years, there is still a compelling need to improve quality and control costs as roughly 10,000 baby boomers a day age into Medicare coverage. As beneficiaries continue to choose MA plans, the potential payoff of increased plan competition on both quality and price grows as well. In “Medicare Advantage: Better information tools, better beneficiary choices, better competition,” John Bertko, Paul B. Ginsburg, Steven Lieberman, Erin Trish, and Joseph Antos make four recommendations to help empower beneficiaries to make choices that will not only benefit them but the larger health care system as well. Read the full report here.

Taking Stock of Insurer Financial Performance in the Individual Health Insurance Market through 2017

The Affordable Care Act (ACA) implemented wide-ranging reforms to the individual health insurance market starting in 2014, most importantly by barring insurers from denying coverage or varying premiums based on health status, requiring all plans to cover certain services and provide a basic level of financial protection, providing subsidies to help low- and moderate- income people afford coverage, and requiring all individuals to have coverage or pay a penalty.  In “Taking Stock of Insurer Financial Performance in the Individual Health Insurance Market Through 2017,” Matthew Fiedler takes a detailed look at insurers’ financial performance in this new institutional environment, as well the economic forces that have shaped that performance. Read the full report here.

A Better Approach to Regulating Provider Network Adequacy

Health care reforms, including those put in place by the Affordable Care Act, are making insurers more competitive. However, in their effort to lower costs, health insurers more often are selling health plans that cover fewer hospitals, and many fewer physicians.Read the full paper here 

Effects of the More Austere Medicaid Per Capita Cap Included in the Senate’s Health Bill

Last month, we analyzed how states and the federal budget would have fared had a Medicaid per capita cap like the one envisioned in the House-passed American Health Care Act (AHCA) been implemented in the recent past. On June 22, the Senate released a “discussion draft” of their Affordable Care Act repeal bill: the Better Care Reconciliation Act of 2017 (BCRA). The BCRA also includes a Medicaid per capita cap, but that proposal differs in important ways from the one passed by the House.Read the full paper here.

Would Price Transparency for Generic Drugs Lower Costs for Payers and Patients?
Steven Lieberman and Paul Ginsburg provide background information on generic prescription drug pricing and outline a proposed policy to generate information on actual average prices paid by retail pharmacies to acquire generic drugs. Read the full paper here.Effects of the Medicaid Per Capita Cap Included in the House-Passed American Health Care Act
Loren Adler, Matthew Fiedler, and Tim Gronniger examine how this change in Medicaid’s financing structure would affect states’ Medicaid programs. Read the full paper here.

Making Health Care Markets Work: Competition Policy for Health Care 
Many studies have examined trends towards increasing consolidation of physician practices and hospitals in the US health care system and the negative effects of decreased competition on the quality of patient care and health care costs.   JAMA Viewpoint Here and White Paper here.  A Forbes Op-Ed on the paper is here.

Building a Better “Cadillac”
The excise tax on high-cost health insurance plans, a provision of the Affordable Care Act (ACA), has the potential to achieve two important goals by curbing the open-ended exclusion of employer-financed health insurance from personal income and payroll taxes. It will reduce the incentive to offer health insurance with features that permit or encourage excessive health care spending. It will also generate revenues that offset the costs of health insurance expansion. More

Solving Surprise Medical Bills
Imagine you walk into a hospital for a planned procedure, for example a knee operation to be performed by an orthopedic surgeon. Before you scheduled the surgery, you did your due diligence and confirmed that the surgeon performing the procedure participated in your insurance plan, and that the hospital where you were having the surgery was also in-network. More

How the Money Flows Under MACRA
The Medicare Access and CHIP Reauthorization Act of 2015, referred to most often as “MACRA,” set in motion a new approach to Medicare physician payment and replaced the oft-criticized Sustainable Growth Rate with two new payment schemes. In late April, the Centers for Medicare and Medicaid Services (CMS) released many proposed details surrounding the law’s implementation; however, it is important to keep in mind that the final rule is still forthcoming and may incorporate significant changes in response to public comments made on the proposed rule. More


Comments on CMS’s proposed rule for implementation of MACRA provisions

The Center for Health Policy at Brookings, with support from the Schaeffer Initiative for Innovation in Health Policy, a partnership between Brookings and the University of Southern California, submitted comments on a proposed rule to the Centers for Medicare & Medicaid Services (CMS) Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. More


Health Policy Solutions Series

The Schaeffer Initiative offers the new administration and Congress solutions on reforming the Affordable Care Act and the individual health insurance market; improving competition among providers and insurers; making drug pricing more rational; modernizing the Medicare program; and addressing pressing public health challenges. Read the Series >


Do states regret expanding Medicaid?
By: Mark Hall
Now that Congressional efforts to repeal or replace the Affordable Care Act (ACA) have abated, the 18 states that have no expanded Medicaid can consider whether to do so going forward. The ACA’s established funding will pay for 90 percent of the costs of expanding Medicaid to cover people in households with incomes at or below 138 percent of the federal poverty level. Read more at USC-Brookings Schaeffer on Health Policy Blog

By Matthew Fiedler, Tim Gronniger, Paul B. Ginsburg, Kavita Patel, Loren Adler, and Margaret Darling

In 2015, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) on a strong bipartisan vote. In addition to repealing the Sustainable Growth Rate formula that was used to set the level of physician payment rates, MACRA changed the structure of Medicare physician payment in ways intended to encourage clinicians to deliver more efficient, higher-quality care.

MACRA envisioned a long-run transition away from fee-for-service payment toward so-called advanced alternative payment models (APMs), models in which providers bear financial risk for the overall cost and quality of the care they deliver, driven in part by bonuses MACRA created for participation in such models. In the near term, however, most clinicians will participate in MACRA’s Merit-Based Incentive Payment System (MIPS), a value-based purchasing program that adjusts clinicians’ fee-for-service payments upward or downward based on their cost and quality performance, as well as their completion of certain activities related to electronic health records (EHRs) and “practice improvement.” More



By Matthew Fiedler

The Affordable Care Act’s excise tax on employer-sponsored plans, commonly referred to as the “Cadillac tax,” imposes a 40 percent excise tax on employer-provided health benefits with a cost in excess of specified thresholds. Although legislation enacted earlier this month delayed the tax until 2022, it had previously been scheduled to affect plans with costs higher than around $11,000 for single coverage and around $29,000 for other coverage starting in 2020. More


Repealing the Individual Mandate would do Substantial Harm
By Matthew Fiedler

The tax legislation reported by the Senate Finance Committee last week included repeal of the individual mandate, which was created by the Affordable Care Act (ACA) and requires individuals to obtain health insurance coverage or pay a penalty. The Congressional Budget Office (CBO) has estimated that this proposal would cause large reductions in insurance coverage, reaching 13 million people in the long run. More

States Have Already tried Trump’s Healthcare Order. It went Badly.

By: Mark Hall

Even after Republicans in Congress failed three times to rid themselves of the Affordable Care Act, President Trump has proved that there is no shortage of ideas for how to disrupt the healthcare system. The president signed an executive order Thursday that will allow small employers to join associations of small business — such as farm bureaus or chambers of commerce — that provide health coverage to their members. If such associations self-insure, existing law might enable them to avoid both state insurance regulations and the core of the ACA. Thus, a simple turn of the regulatory dials could free up a large portion of the most heavily regulated parts of the health-insurance market. More

How will the Graham-Cassidy Proposal Affect the Number of People with Health Insurance Coverage?
By: Matthew Fielder and Loren Adler

On September 13, Senators Graham and Cassidy, together with two other Republican colleagues, introduced legislation that would repeal major portions of the Affordable Care Act (ACA). Press reports indicate that the legislation has gained considerable support among Senate Republicans, and Senate Majority Leader McConnell’s office announced on Wednesday the Senate would hold a vote on this legislation sometime during the week of September 25. More.

Network Adequacy Under The Trump Administration

By: Mark Hall and Caitlin Brandt

Network adequacy was one of the many critical issues that the Trump administration confronted when it took over responsibility for administering the Affordable Care Act (ACA). In an effort to provide greater consumer value, insurers in the ACA’s reformed Marketplace have shifted to much narrower provider networks than had existed previously. More

A Billion Here, a Billion There: Selectively Disclosing Actual Generic Drug Prices Would Save Real Money
By: Steven Lieberman, Margaret Darling, and Paul Ginsburg

Brand and generic prescription drugs dispensed by retail pharmacies cost nearly $400 billion and accounted for more than 10 percent of health care spending in 2016. Despite totaling more than $100 billion, reimbursement for generic drugs has received relatively little policy attention. More

Receive a surprise medical bill? Here are three federal actions that may address surprise bills
By: Margaret Darling, Caitlin Brandt, Loren Adler, and Mark Hall

“Surprise” out-of-network bills are widely seen as an unfair aspect of today’s health care markets.  Patients are unfairly surprised when they are billed by a provider not in their insurer’s network where they had no reasonable opportunity to choose a network provider. More

Reining In Pharmaceutical Costs
By: Karen Van Nuys, Dana P. Goldman, and Ian D. Sptaz

Most Americans believe that President Trump and the Congress should make lowering the cost of prescription drugs a priority. With strong support among republicans, democrats and independents, policy fixes that can slow the rapid rise of prescription pharmaceutical costs may be among the few areas where bipartisan cooperation is possible. More

How the BCRA Would Impact Enrollee Costs, According to your Age
By: Loren Adler and Paul Ginsburg

Much attention has focused on how the recently-introduced Senate Republican health care bill – the Better Care Reconciliation Act of 2017 (BCRA) – would impact health insurance premiums, both before and after accounting for lower subsidies, and patient cost-sharing in the individual market. More

Sen. Cruz’s Proposed Change to Senate Health Care Bill Would Undermine Protections for Enrollees with Significant Health Care Needs
By: Matthew Fiedler

Senate Republicans are considering an amendment to the Better Care Reconciliation Act (BCRA) proposed by Sen. Ted Cruz that would relax a range of regulations on individual market insurance plans introduced in the Affordable Care Act (ACA).  While no formal legislative language has been introduced, Cruz’s proposal would allow insurers that offer at least one ACA-compliant plan to offer “non-compliant” plans that do not abide by ACA regulations. More

How Would the Senate’s Health Care Bill Affect Individual Market Premiums?
By: Matthew Fielder and Loren Adler

On Monday, the Congressional Budget Office (CBO) published a comprehensive analysis of the Better Care Reconciliation Act (BCRA), Senate Republicans’ Affordable Care Act repeal legislation. While many reactions to the CBO analysis focused on how the BCRA would affect insurance coverage, the bill’s effects on individual market insurance premiums have also received considerable attention. More

Changes to State Innovation Waivers in the Senate Health Bill Undermine Coverage and Open the Door to Misuse of Federal Funds
By: Jason A. Levitis

On June 22, Senate Republicans released their much-awaited health reform bill, the Better Care Reconciliation Act of 2017 (BCRA). Much attention has rightfully focused on the bill’s myriad changes to the Medicaid program and to subsidies for the purchase of private insurance. But the legislation also makes potentially highly impactful changes to state innovation waivers, which are included in section 1332 of the Affordable Care Act (ACA). More

Like the AHCA, the Senate’s Health Care Bill Could Weaken ACA Protections Against Catastrophic Costs
By: Matthew Fiedler

​On Thursday, Senate Republicans unveiled the Better Care Reconciliation Act (BCRA), its Affordable Care Act (ACA) repeal bill. One provision of that legislation would greatly expand states’ ability to waive a range of provisions of federal law that affect health insurance. More

Turmoil in the Individual Market- Where it Came From and How to Fix it
Henry J. Aaron, Matthew Fielder, Paul B. Ginsburg, Loren Adler, and Alice Rivlin

In recent weeks, some health insurers have announced that they will not offer individual market coverage in 2018, while others have requested sizable premium increases. In response to this news, President Donald Trump has pronounced the individual market structure created by the Affordable Care Act (ACA) “dead.” Similarly, House Speaker Paul Ryan (R-WI) has claimed that the market is experiencing a “death spiral” reflecting fundamental flaws in the ACA’s design. These claims misdiagnose the situation. The ACA’s individual market structure — though not perfect — is sound and has succeeded in greatly expanding coverage. As 2017 began, the market was poised to leave behind the growing pains of the past few years. Then the President and Congress acted to create needless turmoil. More

To Promote Stability in Health Insurance Exchanges, End the Uncertainty Around Cost-Sharing and Other Rules
by: Erin Trish, Loren Adler, and Paul Ginsburg

On April 13, 2017, the Centers for Medicare and Medicaid Services (CMS) released its first set of regulations affecting the health insurance exchanges created by the Affordable Care Act (ACA) under the Trump administration. In the regulations, CMS indicated that the rule “finalizes changes that will help stabilize the individual and small group [health insurance] markets.”
While it is unclear whether the changes included in the rule will have a small positive or small negative impact on market stability, it is clear that the impact pales in comparison to the  significant instability caused by the lack of commitment from the administration (or Congress) to fund the ACA’s cost-sharing reduction subsidies or to enforce the individual mandate. More

How Should The Trump Administration Handle Medicare’s New Bundled Payment Programs?

by: Tim Gronniger, Matthew Fiedler, Kavita Patel, Loren Adler, and Paul B. Ginsburg

Secretary of Health and Human Services (HHS) Dr. Tom Price and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma face significant decisions across a range of programs in the first half of 2017. Decisions regarding how the new Administration will approach the health insurance marketplaces rightly command the most attention, but important decisions on payment reform loom as well. More

New Changes to Essential Benefits in the GOP Health Bill Could Jeopardize Protections Against Catastrophic Costs, Even for People with Job-Based Coverage

by: Matthew Fiedler

One of the core functions of health insurance is to protect people against financial ruin and ensure that they get the care they need if they get seriously ill. To help ensure that insurance plans met that standard, the Affordable Care Act (ACA) required plans to limit enrollees’ annual out-of-pocket spending and barred plans from placing annual or lifetime limits on the total amount of care they would cover. More

Tackling the Opioid Crisis with Compassion, New Ways to Reduce Use and Treatment

by: Jason Doctor

Opioids provide immediate comfort to a person in pain, but result in other miseries when prescribed on a long-term basis.  Our policy towards opioids over the past two decades has had disastrous results—leading to the worst drug epidemic in U.S. history.More



by: Loren Adler and Matthew Fielder

On Wednesday a pair of House Committees began considering Republicans’ Affordable Care Act (ACA) repeal legislation, the first formal step toward consideration of that legislation by the full House of Representatives. Congressional Budget Office (CBO) estimates of the effects of this legislation are not yet available, and it appears they will not be available until after both committees have voted on the bill. More



by: Matthew Fiedler

The Centers for Medicare and Medicaid Services (CMS) recently published final data on the number of people who used to sign up for health insurance coverage through the Affordable Care Act’s (ACA) Marketplaces during the 2017 open enrollment period. These data support two important conclusions about the state of the Marketplaces and their near-term future. More



by: Loren Adler, Mark Hall, Caitlin Brandt, Paul Ginsburg, and Steven M. Lieberman

More than a dozen states have enacted various protective measures to protect patients from surprise medical bills. This post outlines why federal action is needed and recommendations on how to move forward. More



by: Neeraj Sood, Loren Adler, Paul Ginsburg, and Margaret Darling

A recent study found Medicare Fee-for-Service and Medicare Advantage patients have hospitalization and post-hospitalization costs and outcomes that are generally different. How do these outcomes translate to policy recommendations? More



By: Erin Trish



In order to mitigate incentives for insurance companies to avoid sicker patients, policymakers will need to include a risk adjustment program in any replacement reforms that require insurers to issue insurance to any applicant and set limits on adjusting premiums to fully reflect an enrollee’s health status.More


By: Loren Adler and Paul Ginsburg

Protecting patients against catastrophic health expenses and medical bill-induced bankruptcy is often cited as the core purpose of health insurance. Yet lifetime limits on coverage and the lack of annual out-of-pocket (OOP) limits, which were commonplace in private insurance before the Affordable Care Act (ACA) banned the practices, negate this central function of insurance (traditional Medicare also lacks an annual out-of-pocket limit). More
Why repealing the ACA before replacing it won’t work, and what might
By: Alice Rivlin, Loren Adler, and Stuart ButlerWith Republicans now in control of the Presidency, Senate, and House of Representatives, they have the opportunity to fulfill their repeated promise to repeal and replace the Affordable Care Act (ACA). They banded together to pass repeal alone early this year (albeit knowing it would get vetoed by the president), but no detailed consensus replacement plan has emerged. More

Key takeaways from the final MACRA rule, plus remaining challenges
By: Kavita Patel, Margaret Darling, and Paul Ginsburg

In early November, the Centers for Medicare and Medicaid Services (CMS) published their final rule on implementation of Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), providing the final word on how the law will be implemented for at least its first year.

Passed and signed into law in March-April 2015 by overwhelming bipartisan majorities in the House and Senate, MACRA was a decisive move away from the former Sustainable Growth Rate (SGR) formula that beset physicians with uncertainty surrounding cuts to Medicare rates and frustrated economists by continuously deferring cost-controlling cuts. More

How the Department of Labor Can Help End Surprise Medical Bills

By: Mark Hall

Each year, millions of Americans seek care at a facility in their insurer’s network or with an in-network physician only to be hit with a surprise bill from an out-of-network provider involved in their care who they did not actively choose. These bills can be very large because out-of-network providers can “balance bill” the patient—meaning that the provider bills a patient for the difference between what the patient’s health insurance will pay and the provider’s “list price” (which can be very large and bears little relation to the rates they usually accept or their costs). More

Affordable Care Act Premiums are Lower Than You Think
By: Loren Adler and Paul Ginsburg

Since the Affordable Care Act’s (ACA) health insurance marketplaces first took effect in 2014, news story after story has focused on premium increases for certain plans, in certain cities, or for certain individuals. Based on preliminary reports, premiums now appear set to rise by a substantial amount in 2017.

What these individual data points miss, however, is that average premiums in the individual market actually dropped significantly upon implementation of the ACA, according to our new analysis, even while consumers got better coverage. In other words, people are getting more for less under the ACA. More

5 Takeaways from the 2016 Medicare Trustees Report
By: Alice Rivlin and Loren Adler

This year’s Medicare Truste
The Center for Medicare and Medicaid Innovation (CMMI, or “the Innovation Center”) recently announced an initiative called Comprehensive Primary Care Plus (CPC+). It evolved from the Comprehensive Primary Care (CPC) initiative, which began in 2012 and runs through the end of this year. Both initiatives are designed to promote and support primary care physicians in organizing their practices to deliver comprehensive primary care services. Comprehensive Primary Care Plus has some very promising components, but also misses some compelling opportunities to further advance payment for primary care services. More

Physician payment in Medicare is changing: Three highlights in the MACRA proposed rule that providers need to know

By: Kavita Pate, Margaret Darling, Caitlin Brandt

The passage of the Medicare Access and CHIP Reauthorization Act (MACRA) just over a year ago signaled a strong and unique bipartisan agreement to move towards value-based care, but until recently, many of the details surrounding how it would be implemented remained unknown. But last week, the Centers for Medicare and Medicaid Studies (CMS) released roughly 1,000 pages that shed more light on how physician payment will hopefully dramatically change for the better. More