State views, even in GOP states, not fully aligned with current repeal initiatives

An issue brief from the Kaiser Family Foundation (KFF) summarizes input and recommendations from governors and insurance commissioners in 35 states regarding health care reform, including their view on repeal and replacement of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and changes Congress is considering to the structure and financing of Medicaid. KFF’s analysis in its issue brief shows that state leaders have varied views on ACA repeal and replacement and potential changes to Medicaid. While many of their views fall along party lines, some views are shared across parties and those who support and oppose repeal.

On December 2, 2016, Republican House leaders sent a letter to state governors and insurance commissioners seeking input and recommendations based on their experience overseeing the health insurance markets and Medicaid programs within their respective states. Responses were due by January 6, 2017.

The respondents included a mix of governors and insurance commissioners in 34 states and the Mayor of the District of Columbia. Among the 35 responding states, 18 had a Republican governor at the time of the response and 17 had a Democratic governor. Three-fourths (26 of 35) of the states had adopted the ACA Medicaid expansion (ACA, section 2001) to low-income adults.

ACA repeal

The KFF analysis found that 23 of 35 responses cited some positive effects of the ACA. This group included all respondents from Democratic-led states and six of the 18 respondents from Republican-led states. The respondents pointed to several positive effects, including gains in coverage, reduced uninsured rates, increased affordability for subsidized consumers, increased access and utilization of care, and reductions to uncompensated care for hospitals.

Challenges with the ACA were cited in 21 of the 35 responses. All 18 respondents from states with Republican governors cited challenges, as well as respondents from three states with Democratic governors. Respondents pointed out several issues, including the following:

  • the ACA has shifted too much control of health insurance to the federal government and that greater authority and flexibility should be given back to states to regulate their insurance markets;
  • the ACA has caused insurers to leave the individual market leading to more limited access and choice for consumers;
  • continuing premium increases;
  • the prevalence of narrow network plans that limit access to providers; and
  • the sustainability of Medicaid due to the significant growth in enrollment under the ACA Medicaid expansion.

Across both parties, 29 of 35 respondents were concerned about repealing the ACA. All 17 responses from states with a Democratic governor noted concerns, as did 12 of the 18 responses from states with a Republican governor. The concerns included potential coverage losses for individuals covered through the marketplaces or Medicaid expansion, marketplace instability caused by repeal, the loss of federal funding, the shift of cost to the states, disruption of delivery and payment reform initiatives, and increased administrative costs.

Medicaid financing structure

The Trump administration and Republican Congressional plans have called for Medicaid to be financed through block grants or per capita caps. In exchange for caps, the states would get increased flexibility to administer their programs.

The KFF analysis found that 18 of 35 of the responses included comments on Medicaid financing, particularly the move to a block grant or per capita cap financing structure. Twelve of the 18 respondents indicated concerns about a capped financing structure. Ten of the 12 respondents expressing concerns were from states with a Democratic governor.

Respondents in six of the 18 Republican states indicated general support for capped financing, but most included suggestions on how a cap should be structured. Their suggestions included:

  • limiting cap financing to only certain parts of the Medicaid population (e.g., excluding seniors and people with disabilities);
  • having the cap allow for enhanced funding during economic downturns;
  • reviewing the cap annually; and
  • ensuring that the cap does not disadvantage states that have not taken up certain program options, like the Medicaid expansion.

Medicaid flexibility

Fourteen of the 35 responses, most from Republican states, indicated an interest in increased state Medicaid flexibility.The suggested areas for increased flexibility included premiums and cost sharing, benefits, eligibility (including enrollment caps, work requirements, income standards), provider payments, and delivery systems.

Section 1115 waivers

Republican respondents in 10 of the 35 states cited interest in increased flexibility and streamlined processes to make changes under Social Security Act §1115 (Section 1115 waivers). These comments included providing a pathway for waivers to become permanent, eliminating or reducing renewal requirements for waivers, allowing other states to replicate waiver changes approved for other states, providing expedited and streamlined approval processes for waivers and state plan amendments, and reductions in regulatory requirements and state reporting requirements.

Section 1332 waivers

Most respondents (20 of the 35) did not provide comments on ACA section 1332 waivers for state innovation. Seven respondents indicated they are or would potentially consider pursuing a 1332 waiver or that they supported maintaining the 1332 waiver authority. Eight respondents indicated that they are not planning to utilize this authority. Several respondents indicated that the current rules related to 1332 waivers are too restrictive, limiting their interest in pursuing a waiver.

Senate hearing on individual market goes off-track fast, gets partisan

A Senate committee hearing on how to stabilize the individual health insurance market quickly devolved into a platform to make partisan comments and score political points regarding the proposed repeal and replacement of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This occurred despite the efforts of the committee chairman to focus the committee on a transition plan for the individual market and the statements of the committee witnesses, which were non-partisan and conciliatory.

The Chairman’s remarks. In his introductory remarks, Sen. Lamar Alexander (R-TN), Chairman of the Senate Committee on Health, Education, Labor & Pensions, expressed his hope that the committee could put aside the partisan talking points and come together to find solutions to ensure the viability of the individual health insurance market during the transition from the ACA. The individual mandate to obtain health insurance was created by section 1510 of the ACA.

Alexander noted that the individual market makes up only 6 percent (18 million beneficiaries nationwide) of the total health insurance market, with only 4 percent covered through the ACA Exchanges. He further noted that some health care plans have pulled out of the Exchanges and many individuals may have only one plan to choose from. He asked the panel and the committee to focus on three questions: (1) Is there really instability in the individual markets? (2) If so, what needs to be done? (3) By what date must it be done?

The Ranking Member’s remarks. Ranking Member Patty Murray’s (D-WA) opening statement showed that she had no intention of following Alexander’s plea for a non-partisan hearing. Instead, she began by stating that while the individual market had always been a problem, the ACA helped to solve that problem, and now the Republican’s plan to repeal the ACA without a concrete plan for replacement is creating chaos in the health care system. She also went outside the individual market focus of the hearing and claimed that Republican policies would cut Medicare and Planned Parenthood. She termed the Trump Administration efforts as “TrumpCare by sabotage” and urged the Republicans to reverse their course and stop repeal of the ACA. She concluded by sarcastically suggesting that you “can’t repair the roof while Republican Party is burning the house down.”

Sen. Tim Scott (R-SC) responded to Sen. Murray’s comments with “the house may be on fire, but it was on fire before we got here.” He was also able to get one witness to concede that the individual market had already been destabilized by specific provisions of the ACA itself, including the essential health benefit requirement, special enrollment periods and extended grace periods that have allowed individuals to game the system, medical loss ratios, and having premiums for young people set higher than the penalties for not having coverage.

The witnesses. The committee witnesses included Julie Mix McPeak, Comissioner of the Tennessee Department of Commerce and Insurance; Marilyn Tavenner, former CMS Administrator and current President and Chief Executive Officer of America’s Health Insurance Plans; Janet Trautwein, Chief Executive Officer of the National Association of Health Underwriters; and Steve Beshear former Democrat Governor of Kentucky from 2007 to 2015.

All of the witnesses were in agreement that the individual health insurance market does not react well to the uncertainty that currently exists. And three of the four witness agreed that the number of plans available are dropping and the premiums are rising.

When asked by Alexander for a deadline for when Congress must act, the witness stated by the end of March at the latest. This, they stated, was because rates must be set by mid-July and plans approved by the various states by August.

McPeak. In her statement, McPeak testified that, “In short, Tennessee’s ACA individual market experience since 2014 has meant fewer marketplace carriers for Tennessee consumers, less competition across the state, and higher priced premiums for available products. In addition, we have seen existing FFM carriers move towards narrower networks, further limiting consumers’ access to providers of their choosing.”

She stated that there are only three ACA carriers in Tennessee, with only one choice in 73 of the 85 counties. In addition, she stated that premium rate increases have ranged from 42 to 62 percent in her state. She did not call for a delay in the repeal of the ACA, but, instead, asked Congress to allow states to tailor health care plans to fit their needs and urged an open and transparent repeal and replace process so that carriers can prepare adequately.

Tavenner. In her statement, Tavenner admitted that parts of the ACA have not worked well. She stressed that certainty in the individual market is essential. She recommended: (1) continuing to provide subsidies such as the advanced premium tax credits and cost-sharing reduction payments in their entirety; and (2) making full federal reinsurance payments for 2016, as this funding is important for plans to effectively cover the needs of high-need patients, including those with chronic conditions.

Tavenner also recommended several policies to help promote a more stable and workable transition for consumers and families, including:

  • Using premium tax credits to encourage younger people to get coverage.
  • Creating incentives for people to keep their coverage through the transition.
  • Beginning in 2017, establish a federally funded, transitional risk pool program would offset some of the costs of serving patients who have the most complex health conditions and need the most care.
  • Eliminating taxes and fees such as the health insurance tax, which will reduce premiums and promote affordability.
  • Effectively verifying the eligibility of those signing up for coverage during special enrollment periods, and shortening the 3-month grace period for non-payment of premiums so that it is better aligned with state laws and regulations (e.g. 30-day period).
  • Protecting people who are eligible for public programs from being inappropriately steered into the commercial insurance market.

Trautwein. Trautwein called for immediate stabilization of the individual market. She attributed the higher cost of individual plans to rules allowing healthy individuals to drop in and out of plans without consequences and allowing special enrollment periods without requiring upfront documentation and allowing inappropriate coaching by enrollers. She recommended:

  • Requiring guaranteed access to individual coverage and with state-level financial backstops for catastrophic risks.
  • Giving pre-existing condition credit for prior individual market coverage to ensure true heath insurance portability from one individual market policy to another.
  • Standardizing state requirements regarding the consideration of pre-existing conditions.
  • Improving federal group-to-individual coverage portability provisions so that people can transition directly from employer coverage to individual coverage without hurdles.
  • Stabilizing individual market rates by requiring more standardization as to how individual market carriers determine pricing.
  • Increasing consumer protections regarding individual market coverage rescissions.
  • Making it easier for employers to help people purchase individual health insurance.
  • Providing federal financial assistance to keep individual health insurance coverage affordable, including enhanced deductibility, subsidies for low-income individuals, and federal financial support for qualified state financial backstop programs.
  • Ensuring that all Americans have health insurance coverage.
  • Allowing state implementation of enhanced consumer protections with a federal fallback enforcement mechanism.

Beshear. In his statement, Beshear gushed about the ACA and what it did to increase the number of people with health coverage in Kentucky. He claimed that his creation of a state exchange and the expansion of Medicaid added 500,000 to the insured roles in Kentucky. He stated that he does not view the ACA as a partisan issue, but rather a tool to address health insurance problems. He believes that the ACA works and that Congress’ challenge is to make it work better.

House Republicans narrow aim to specific provisions in health reform battle

House Republicans introduced four bills as part of a new piecemeal strategy to repeal and redefine the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The proposed legislation—which will be considered at a February 2, 2017, hearing before the House Energy and Commerce Committee—concerns: (1) special enrollment period (SEP) eligibility verifications; (2) premium rate ratios; (3) grace periods for missed premium payments; and (4) a political promise to continue the ban on preexisting condition exclusions.

SEP

The first bill would require HHS verification of an individual’s eligibility for a SEP before an insurer would be permitted to make coverage effective for that individual. Although HHS has already developed a pilot program for some SEP eligibility verifications, the bill would require HHS to create a verification process, through interim final rulemaking, for plan years beginning on or after January 1, 2018.

Premium variation

The second bill would give insurers more authority to vary the premium rates charged to older enrollees, as compared to younger enrollees, in the individual and small group markets. The bill would permit insurers to raise the current ratio of three-to-one to a ratio of five-to-one, or, to any other ratio established by a state. The greater variation addresses insurer complaints that the three-to-one ratio is not actuarially appropriate.

Grace period

The third bill would reduce the length of the current 90-day grace period afforded to premium tax credit recipients who miss their premium payments. The bill would shorten the grace period to one “provided by law” or one month. Although premium tax credit recipients are, by definition, experiencing financial difficulty, the bill is designed to assuage insurers’ contentions that premium tax credit recipients are using the grace period to skip the last three months of premium payments, catching up only when or if they develop a need for health care. However, HHS noted in the preface of its Notice of Benefit and Payment Parameters for 2018 (81 FR 94058) that such grace period “gaming” claims are unsubstantiated.

Preexisting conditions

The fourth bill, which does not promise a change in policy, is a statement of policy. In essence, the bill is a promise, in the event Congress decides to repeal the ACA, that the health reform replacement will include a provision with an absolute ban on preexisting conditions clauses. The bill establishes Congress’ position that it will not allow a return to a health insurance market where coverage decisions are based upon the status of an enrollee’s health. The bill makes a curious exception, however, for genetic conditions which have not already led to a diagnosis.

Primary care physicians favor ACA over repeal

In a survey conducted between January and March 2015, only 15 percent of primary care physicians supported a complete repeal of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). With the Republican party intent on changing the healthcare landscape dramatically over the next year, researchers from Johns Hopkins University School of Medicine, the University of Pennsylvania Perelman School of Medicine, and Massachusetts General Hospital found that primary care physicians were split on their views towards the ACA, with approximately 48 percent favorable and 52 percent unfavorable. The survey, published in the New England Journal of Medicine, also found that a majority of the physicians reported that they had seen an increase in the number of Medicaid or newly insured patients, without a decrease in their ability to provide high-quality care.

About 95 percent of all respondents said they did not believe insurers should be allowed to deny coverage to those with pre-existing conditions or charge these patients more; 88 percent favored children kept on parents’ plans until age 26; 91 percent supported tax credits for small businesses that offered employees health insurance; 75 percent supported tax subsidies for individuals to buy insurance; 72 percent supported the Medicaid expansion; and 50 percent supported tax penalties for people who did not buy insurance.

These numbers are substantially less than the 26 percent of the general public who say they want Obamacare gone, as reported by the Kaiser Family Foundation. In the NEJM published survey, no physicians who self-identified Democrats reported being in favor of ACA repeal. But the survey also demonstrated a dissonance between physicians beliefs about patients’ healthcare entitlements and what a healthcare system can cover. For instance, as noted, 95 percent of physicians believed the prohibition on denying coverage for those with pre-existing conditions should continue, but only 50 percent supported the individual mandate despite the difficulties of covering as many individuals as possible without the penalty in place.

Overall, 426 physicians responded to the survey and the response rate was 45.1 percent. The researches noted that nonresponses limited their ability to generalize findings and that primary care physicians could have different views from other physicians.