Florida’s continuing battle over Medicaid expansion: Compromise fails

Florida’s Republican-controlled Senate passed legislation on June 3, 2015, that would expand Medicaid, with a bit of a twist. So many members of the state House of Representatives are opposed to accepting any part of “Obamacare” that the Senate bill does not describe the program as Medicaid. Rather, the bill would create the Health Insurance Affordability Exchange (HIAX), which would provide premium assistance to individuals who would be newly eligible for Medicaid under the amendments made by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and the Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152).

Under the legislation, the Florida Medicaid agency, the Agency for Health Care Administration (AHCA), would apply for a demonstration project waiver under Soc. Sec. Act sec. 1115, which would allow the agency to: (1) provide beneficiaries with benefits, in part, in the form of a health savings account; (2) require beneficiaries to pay premiums; and (3) establish a work requirement.  Beneficiaries would choose among several plans, including high-deductible plans combined with health savings account, but also including qualified plans that meet the requirements for minimum essential coverage under the ACA.

The bill includes features of demonstration projects that CMS has approved previously, although it arguably pushes the envelope with respect to the work requirement and payment of premiums.

Charging premiums

There is no income at which an adult beneficiary would be entirely exempt from the payment of premiums, but individuals with incomes not exceeding 2 percent of the federal poverty level (FPL) would pay only $3 per month. The premiums would rise to $20 per month for individuals with incomes at 100 percent of FPL and $25 for individuals with incomes above 100 percent of FPL.

The work requirement

Beneficiaries would be required to document that they are engaged in work-related activitity for a sufficient number of hours per week unless they persuade the agency that they qualify for an exception because they are disabled or are the caregiver of a disabled child or adult. The statute defines “disabled” as an individual who has:

one or more permanent physical or mental impairments that substantially limit his or her ability to perform one or more major life activities of daily living, as defined by the Americans with Disabilities Act, without receiving more than 8 hours of assistance per day.

A parent caring for a healthy newborn would not qualify for an exception under this definition because the newborn’s condition neither impaired nor permanent. Anyone with a child under the age of 18 must engage in one or more of the three required activities for at least 20 hours per week. A childless adult must engage in at least 30 hours of work activity weekly.

The required work activity includes paid employment, “educational pursuits,” or on-the-job training or placement activities. The agency may require beneficiaries to obtain written confirmation of job interviews or receipt of an application from a potential employer.

CMS’ treatment of similar waivers

Ab0ut three years ago, CMS denied Florida permission to impose premiums and work requirements on beneficiaries with incomes under the FPL. At that time, the ACA’s maintenance of effort requirements would have prohibited the addition of premiums, but even without the MOE, the Medicaid statute prohibits premium requirements for beneficiaries under the FPL. According to Families USA, CMS has approved Medicaid expansion waivers in Iowa and Arkansas that charged premiums of $5 per month to beneficiaries with incomes between 50 percent and 100 percent of FPL; the premium was about equal to 1 percent of income for a beneficiary at 50 percent of FPL. Higher premiums for individuals living below the poverty level have routinely been disapproved.

These waivers do not permit a penalty for nonpayment, however. According to Families USA’s analysis, CMS has allowed Medicaid expansion waivers to disenroll beneficiaries who fail to pay after a 60- or 90-day grace period approved penalties for nonpayment. It also allowed Indiana to move beneficiaries from a program with enhanced benefits to one with basic Medicaid benefits after failure to pay a premium. Similarly, the agency has allowed states to encourage work-related activity by rewarding it with reduced cost sharing but has not allowed them to tie coverage directly to the work requirement.

Compromise fails

The state Senate has presented this legislation as an alternative to Medicaid expansion.On June 5, 2015, the House rejected the compromise by a vote of 72-41.It appears, however, that neither the House nor Governor Scott is interested.

The state has resisted cooperating with the federal government on anything related to the ACA. In 2013, the state passed legislation barring the Office of Insurance Regulation from enforcing the federal requirements under the ACA. Now that the law has expired, Florida regulators will review plans for compliance for the first time.