Highlight on Utah: Healthy Utah, Happy Utah?

Utah Governor Gary Herbert’s Medicaid expansion plan, nicknamed “Healthy Utah,” was amended and passed by the full Senate on February 25, 2015. The amendments reduced the term of the expansion from five years to two. S.B. 164 is sponsored by Republican Senator Brian Shiozawa. After the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) made Medicaid expansion available and mandatory for all states and a subsequent Supreme Court finding in National Federation of Independent Business v Sebelius made expansion optional, about half of the states decided to expand. Others, like Utah, are still trying to pass an expansion bill. Several states began using Section 1115 waivers, previously used for testing new policies under Medicaid, to expand Medicaid in ways not specifically outlined in the ACA.

Why now?

In general, more conservative states have been resistant to Medicaid expansion due to financial concerns. The national average of those considering themselves religious sits at 49 percent, while 79 percent of Utah citizens consider themselves religious. The majority of those considering themselves religious in Utah, both citizens and state legislators, are part of the Church of Jesus Christ of Latter-day Saints (LDS). Some religious clergy previously united to urge the governor to expand Medicaid coverage, but the absence of LDS leaders illuminated the lack of consensus within the state on the topic. In 2013, Governor Herbert requested information from the state health department regarding expansion options and took his time deciding before moving forward with the Healthy Utah plan.

Options

The state first commissioned a report analyzing five different options of Medicaid expansion. These options ranged from no expansion to full expansion under the ACA to those with incomes up to 138 percent of the federal poverty level (FPL). These five were narrowed down to three: no expansion, expansion to those 100 percent of FPL, and expansion of traditional Medicaid for those at 100 percent of FPL and then using federal funds to provide assistance to those between 100 percent and 138 percent of FPL. This was expanded to include a recommendation for supporting private insurance purchases for the expansion population with incomes up to the FPL (see Utah governor announces Medicaid expansion, January 29, 2014).

So, what’s the plan?

Governor Herbert decided on a Section 1115 waiver proposal that involves a three year block grant. Those eligible will be adults without children with incomes ranging up to 138 percent of the FPL, and those aged 19 to 64, with children and with incomes from 50 to 128 percent of the FPL. The assistance provided to each individual will be based on the following criteria: individual health care needs, household income, ability to work, and access to employer based or family health insurance. Those who receive assistance will be required to pay co-payments, while private insurance options are available for parents with children on Medicaid.

Why this particular plan?

The governor stated that he considers the ACA a policy failure and supports the efforts to repeal it. However, he decided that his state “must deal with the realities of the law” and sought to provide health care for the needy, pointing out that the ACA policies left a gap of about 62,000 Utah citizens making less than $12,000 and no assistance to purchase health care. The governor described four criteria that he sought to meet while providing this much-needed assistance, balancing the interests of those in need of health care coverage and the taxpayers to “work toward the best deal possible.” These criteria involve respecting taxpayers by directing tax money back to the state, supporting private markets by providing financial assistance to allow citizens to purchase of private health insurance as opposed to using the money for federal Medicaid funds, promoting responsibility by including premiums and copays as well as introducing aid recipients to work programs, and maximizing flexibility by limiting it to a three-year program. This three year time span allows the state to evaluate its effectiveness. Provisions are also made for program termination if the federal government restricts promised funding.

Highlight on Vermont: GOP Pushing for Alternative to Vermont Health Connect

Republican legislators in Vermont unveiled a series of bills in hopes of replacing the current Vermont Health Connect Marketplace. These lawmakers hope to provide more flexibility and a wider range of options to Vermont residents while mitigating waste of taxpayer money. Vermont Health Connect was implemented following the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to allow individuals and families who do not have employer-sponsored insurance coverage to compare and purchase plans. Enrollment on the site began October 1, 2013.

Issues

Enrollees have encountered serious billing issues since the Marketplace opened. One beneficiary paid her premiums on time, yet received multiple incorrect bills including one for over $4,000. Most worrisome was a notification from her insurance provider threatening to terminate her coverage due to unpaid premiums, especially because she had received a cancer diagnosis. The state’s chief of health care reform and Vermont Health Connect spokesman admitted to billing issues, including enrollees not receiving invoices and late bills being sent out. Trinka Kerr, who operates a special health insurance project of Vermont Legal Aid, stated that the problems go further than received bills. Callers have been unable to get billing errors corrected or their payments don’t appear in the system. Others have failed to see coverage activated. Despite these problems, Vermont reports new enrollments within the expected range and over 23,000 coverage renewals.

Legislation Goals

The ideas presented have been brought up multiple times, both prior to and after the October 2013 Exchange launch. Vermont is the only state that requires the purchase of exchange products by individuals and the small-group market. Last year, Governor Shumlin allowed small businesses to purchase plans directly from insurers, but previously Vermont was the only state to require purchase through the state Exchange’s website. The new agenda seeks to provide more flexibility in the system, and some ideas seek to abolish the Vermont Health Connect system. Representatives are also concerned that current plans aren’t affordable for constituents, taxes to pay for certain coverage are unsustainable, and that doctors are too vulnerable to lawsuits, which result in increasing health care costs. Representative Doug Gage pointed out that the design of the current Exchange ate up $190 million in taxpayer money, and wants to reduce taxpayer burden. Representative Cynthia Browning, a Democrat, hopes to see state citizens able to freely choose their health care providers regardless of their doctor’s affiliations.

Bills

Bills taking several different approaches to the Vermont health care system have been introduced this session.

  • H. 78 would provide purchasing flexibility by allowing both individuals and groups to make purchases both outside of the exchange and the state.
  • H. 188 also allows purchases outside of the exchange.
  • H. 177 eliminates the Vermont Health Connect exchange completely.
  • H. 181 establishes exchange coverage as supplemental to beneficiaries’ Medicare coverage.

Support

Support for these bills has been mixed. Last week, Democratic House Speaker Shap Smith supported finding alternatives to the Vermont Health Connect Exchange due to the extensive problems with the website and difficulties in finding swift resolutions. Lawrence Miller felt that Republican solutions were incomplete and the proposed adjustments to the exchange would add complexity, not reduce it. Miller pointed out that the proposals only involve private insurance purchases, and since Vermont’s exchange also encompasses Medicaid coverage, these ideas fail to address a large coverage group.

Next year, businesses with fewer than 100 employees will be required to join the market and in Vermont, they must purchase coverage plans through the Marketplace. Due to the problems with the website and the coverage options available, these business owners are urging representatives to support new options. Lawmakers hope that this will result in bipartisan support of the new direction.

As CHIP Funding Expiration Looms, Dems Take Action

As the expiration of the funding for the Children’s Health Insurance Program (CHIP) approaches, many have put pressure on Congress to take action to extend the program. As such, proposed legislation has been introduced that will extend CHIP funding through 2019 and would help save health insurance coverage for over 10 million children and pregnant woman. Besides the five Democratic Senators who joined together to propose the bill, 37 other Democrats and two Independents from the Senate joined it as co-sponsors. Other supporters of the continuation of this funding noted the effect that the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has had on the importance of CHIP coverage to certain parts of the population.

CHIP History

CHIP, which is supported by federal funding that is set to expire in September of 2015, distributes money to states, which have flexibility to create their own programs to provide health insurance coverage to children and pregnant women in need. Senator Ron Wyden (D-Ore), the ranking member of the Senate Finance Committee, described CHIP as providing “a crucial lifeline to more than 10 million children, ensuring they have access to comprehensive, affordable health care.”

Legislation

In order to keep the expiration of these funds from threatening that “crucial lifeline,” Senator Wyden, along with Senators Sherrod Brown (D-Ohio), Debbie Stabenow (D-Mich), Bob Casey (D-Pa), and Minority Leader Harry Reid (D-Nev), introduced the Protecting & Retaining Our Children’s Health Insurance Program Act of 2015 (PRO-CHIP). PRO-CHIP would extend funding for CHIP through 2019. In Senator Wyden’s state of Ohio alone, this would ensure coverage for 130,000 Ohioans, who would otherwise lose their coverage. It would also result in the continuation of an estimated $146 million in federal funding to be dispersed to his state under CHIP in 2016.

Other Pressure

According to an Op-Ed piece in the New York Times written by Hilary Clinton, former Secretary of State and Democratic New York Senator, and Bill Frist, former Republican Senator out of Tennessee, “state governments continue to rely on [CHIP] to meet crucial health and budget priorities.” While emphasizing the importance of the continuation of the CHIP program, these bipartisan authors also noted that in 2014, all 39 state governors who responded to a poll about the continuation of CHIP supported saving the program.

‘Family Glitch’

Clinton and Frist also described how “the American health care landscape has changed significantly since CHIP started,” and noted what they termed the “family glitch,” or the provision of the ACA that states that families cannot receive subsidized coverage through the Health Insurance Exchanges if one parent in the family received “affordable coverage” through his or her employer. While “affordable” is defined as less than approximately 9.5 percent of the entire household’s income for that individual to sign up by him or herself, the piece stresses that typically the actual cost of the “affordable” coverage ends up being far greater and that, in turn, “for families affected by this glitch, CHIP may be the only affordable option for making sure their children are covered.”

Do the Plaintiffs in King v. Burwell Have Standing Issues?

Much has been argued, discussed, analyzed, and predicted in regard to the potential outcomes in the upcoming Supreme Court matter King v. Burwell (4th Cir., July 22, 2014). Yet, as the date of the Court’s hearing approaches, new information has emerged that is relevant to the very foundation of matter, in a procedural sense. In particular, certain facts have come to light that could undermine the standing of the multiple individual plaintiffs in King. Determining whether the plaintiffs have proper standing in King is no small matter as the potential implications of a plaintiff-friendly decision in King could have disastrous consequences in terms of the future of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

King in a nutshell

The plaintiffs in King—David King, Douglas Hurst, Brenda Levy, Rose Luck—are challenging the IRS’ interpretation of sections 1321 and 1311 of the ACA. In particular, the plaintiffs claimed that IRS, through the implementation of the Internal Revenue Code Section 36B, inappropriately applied premium tax credit subsidies, which were available to state-run Health Insurance Exchanges under section 1311 of the ACA, to federally-facilitated Exchanges, which are allowed to be administered by the federal government pursuant to section 1321 of the Act. In other words, King, Hurst, Levy, and Luck claim that IRC Section 36B oversteps the authority granted in the ACA, which only allows for subsidies for those enrolled through state Exchanges, and allows individuals who enrolled through the federal Marketplace to be eligible for those subsidies as well. The Fourth Circuit rejected that argument and deferred to the IRS’ interpretation of the ACA through section 36B.

What is especially interesting about the King matter is that the High Court decided to hear this matter at all and why it did so. On the same day the King matter was decided by the Fourth Circuit, the D.C. Circuit Court of Appeals decided, via a three-judge panel, virtually the same issue and came out with the opposite opinion—that is, that the ACA did not explicitly provide that subsidies would be available to those enrolling in federally-facilitated Marketplaces and that the IRS interpretation as such was improper (Halbig v. Burwell, D.C. Cir. July 22, 2014). Despite the fact that the D.C. Circuit was set to re-hear Halbig en banc, the Supreme Court stepped in and decided to treat King and Halbig as a circuit split, causing the D.C. Circuit to hold the Halbig hearing in abeyance as it awaited the ruling by SCOTUS.

What is even more pressing, when considering how we got to this point with regard to this issue, is the potential fallout of a reversal of the Fourth Circuit opinion. Many experts have opined on what would become of the individual mandate and the availability of coverage (and of subsidized coverage) through the Exchanges if some states continued to opt out of creating Exchanges and if the High Court said that subsidies would not be available for those enrolled in the federal Marketplace. In particular, some experts are bracing for the worst in this scenario and predicting that if such circumstances were to come to fruition, the entire structure of the ACA could be threatened.

Standing issues in King?

The week of February 9, 2015, less than a month away from the scheduled arguments before the Court, brought about a new King controversy. This time the upheaval was focused on the four individual plaintiffs themselves and potential issues in standing in the matter. Specifically, sources reported that one of the plaintiffs, Luck, used a Virginia (a state that has opted to forgo creating a state-based Exchange and rely on the federally-facilitated Marketplace) motel address to describe her residency and to receive subsidy payments. It was reported that Luck no longer resides at the motel, which has a 28-day stay maximum. Additionally, according to the same reports, the standing of plaintiff King was also questioned as facts emerged that suggest he likely qualifies for other sources of benefits outside the Exchange coverage, namely veterans’ benefits. In that same light, Hurst, another Plaintiff, is also reported to be a veteran and may be qualified for such coverage. Finally, it was also alleged that plaintiff Levy’s income may have been previously misstated and that her true income would be too low to make her subject to the individual mandate under the ACA.

In order for the Supreme Court to find a lack of standing in the matter, all of these allegations against each of the four plaintiffs would have to be true, as each of the plaintiffs would have to lack standing for a basis of dismissal to exist. While the validity of these allegations have yet to be fleshed out, in the scenario that they can all be confirmed, King, which has the potential to dismantle a large source of subsidies (all of those directed to those enrolled in federally-facilitated Exchanges in 37 states) and potentially the underpinnings of the entire health reform initiative, could be dismissed on a procedural issue.