insurance

Employer-sponsored nightmare fuel

Our “Out of Pocket, Out of Reach” series has been detailing the bleak state of health insurance that workers get through their employers. Experts have told me 2027 will be even worse than this year, and recent developments at sizable public-sector employers are reinforcing just how catastrophic things are becoming.

In New Jersey, just weeks before open enrollment begins, the state is threatening to cease offering the health plan for teachers and school workers if a commission can’t agree on how to address premiums, which the consulting firm Aon said need to go up by 34% next year.

The major public school district health plan in Idaho has no money, meaning teachers’ medical claims could go unpaid, and the state is contemplating taking it over. A Texas school district faced an uproar from teachers after proposing to quadruple premium contributions, and then proceeded to backtrack. A Florida school district is grappling with deductibles that will at least double for teachers and workers next year. New York City’s transit system is asking workers to double their contributions to the health plan, as costs are expected to soar by 50% between 2025 and 2030.

Meanwhile, employees at Duke University will be paying 10% to 50% more for their health care premiums next year, depending on their salaries. Not even churches are safe. A diocese administrator in Florida told David Paulsen of the Episcopal News Service that getting hit with a double-digit premium hike “feels like an existential crisis.”

hospitals

An unusual nonprofit conversion

A chain of rural hospitals owned by Quorum Health is becoming a nonprofit. The facilities will stay open, to the communities’ delight, but as my colleague Tara Bannow reports, it’s fair to wonder if investors are getting bailed out by those same communities.

Quorum has a long, complicated history. It used to be part of Community Health Systems, which then spun Quorum off into its own publicly traded company. Quorum then filed for bankruptcy, re-emerging with the backing of private equity.

Switching to nonprofit comes with perks, such as no longer paying taxes and getting access to federal drug discounts. But Quorum’s private equity owners also happen to own some of Quorum’s debt, and they’re getting back the vast majority of what they’re owed under the conversion, while saddling the new nonprofit with a ballooning debt load.

“Are the creditors taking enough of a discount to leave a hospital company that is viable?” Jim Baker, executive director of the Private Equity Stakeholder Project, told Tara. Read more.

medicare

Labyrinthian

Medicare is proposing sizable cuts for a majority of diagnostic lab tests next year. The Trump administration is lumping the decision within its narrative of rooting out waste, but the Centers for Medicare and Medicaid Services is following federal law that requires cuts based on data collection.

Congress has routinely intervened to stave off the full effects of cuts. Some Wall Street analysts predict lab companies like Quest Diagnostics and LabCorp could lose out on millions of dollars of profit if this rule is finalized. But Molly Turco, a former top Medicare official who is a managing director at TD Cowen, wrote to investors last week that “it is most likely that Congress will punt the 2027 [lab] cuts like it has done in previous years.”