Will the AHCA affect Medicaid’s nonelderly adults with disabilities?

The changes to Medicaid under the American Health Care Act (AHCA), as approved by the House Energy and Commerce Committee, carries potential implications for the nearly seven million nonelderly adults with disabilities currently covered under Medicaid, according to a Kaiser Family Foundation (KFF) issue brief. KFF’s issue brief describes how the AHCA would change Medicaid and offers insight on its potential effect upon nonelderly adults with disabilities by examining the type of insurance nonelderly adults with disabilities have, how they qualify for Medicaid, what their characteristics are, what services they receive from Medicaid, and how much Medicaid spends on the disabled.

The AHCA would change Medicaid in three major ways: (1) it would change Medicaid’s financing structure to a per capita cap, resulting in an estimated $880 billion reduction in federal Medicaid spending from 2017 to 2026, according to the Congressional Budget Office (CBO cost estimate of AHCA) (see CBO: Republican plan saves billions as 24M lose coverage, Health Law Daily, March 14, 2017); (2) it would repeal the enhanced federal matching funds for Patient Protection and Affordable Care Act’s (ACA, section 2001) (P.L. 111-148) enrollees as of January 1, 2020, except for those enrolled by December 31, 2019, who do not have a break in eligibility of more than one month; and (3) it would end the enhanced federal matching funds for Community First Choice (CFC) (ACA, section 2401), which provides attendant care services for people with disabilities, as of January 1, 2020 (see ‘American Health Care Act’ earns first stamp of approval, Health Law Daily, March 9, 2017).

Here is a summary of the KFF findings:

  • Type of health insurance. Thirty-six percent of nonelderly adults with disabilities are working for pay compared to 77 percent of those without disabilities. Among those who are working, 64 percent have access to employer-sponsored health insurance, compared to 68 percent of nondisabled workers. Thirty-one percent of nonelderly adults with disabilities have Medicaid, compared to 10 percent of those without disabilities. Only 41 percent have private insurance, compared to 74 percent of those without disabilities.
  • How do they qualify for Medicaid? KFF found that some nonelderly adults with disabilities are eligible for Medicaid through the ACA’s Medicaid expansion and some through a disability-related pathway based on both their low income and functional limitations.
  • Nearly 85 percent of nonelderly adults with disabilities have incomes below 200 percent of the federal poverty level (FPL) ($24,120 per year for an individual in 2017). Fifty-seven percent are white, 23 percent black, 16 percent Hispanic, and 3 percent Asian. About one-third of those enrolled in Medicaid have three or more functional limitations, which is more than two and one-half times the rate for those disabled who are privately insured and more than double the rate of those who are uninsured.
  • What services do they receive from Medicaid? Through Medicaid, nonelderly adults with disabilities have access to regular preventive care as well as medical care for illnesses and chronic conditions. States must provide certain minimum services for adults, such as inpatient and outpatient hospital, physician, lab and x-ray, and nursing home services. States also can choose to provide a broad range of optional services, including prescription drugs, physical therapy, private duty nursing, personal care, rehabilitative services, and case management. Most home and community-based services (HCBS) are also provided at the option of the state.
  • ACA expansion options. Section 2001 of the ACA offered states the option to expand Medicaid to nearly all nonelderly adults with income up to 138 percent of the FPL. As of 2017, 32 states have adopted the expansion. Section 2401 of the ACA created the CFC option to provide attendant care services and supports with a 6 percent enhanced federal matching funds. Eight states elected this option as of 2016. Section 2402 of the ACA also allowed states (17 as of 2015) to offer HCBS through the section 1915(i) option ( Sec. Act §1915(i)), which allows states to serve people with functional limitations that do not yet rise to an institutional level of care. Section 2703 of the ACA also created the Medicaid health homes option, which enables states (22 as of 2016) to provide care coordination services for people with chronic conditions at a 90 percent enhanced federal match for the first two years.
  • How much does Medicaid spend on people with disabilities? As of 2011, people with disabilities accounted for 15 percent of total Medicaid enrollment but 42 percent of program spending. Per enrollee spending for people with disabilities totaled $16,643 in 2011, more than five times higher than for adults without disabilities ($3,247) and nearly seven times higher than for children without disabilities ($2,463). One-half of states spend between $15,000 and $19,999 per enrollee for people with disabilities, and another third of states spend between $20,000 and $34,999 per enrollee for people with disabilities.

KFF believes that the AHCA’s per capita cap and elimination of the enhanced federal financing under the ACA expansion will put the states under budgetary pressures due to a reduction in Medicaid funds. It believes that these budgetary pressures may result in the limitation of Medicaid services for recipients, including the nonelderly disabled. KFF believes that careful consideration of the AHCA implications is warranted.

Did CMS just sound the death knell for Medicaid expansion?

In their first joint action, HHS Secretary Price and newly confirmed CMS Administrator Verma issued a letter to state governors discussing potential improvements to the Medicaid program. The letter underscored the need to develop cost-effective, state-specific ways to serve vulnerable populations but made clear the administration’s anti-expansion stance, noting that the Patient Protection and Affordable Care Act’s (ACA’s) (P.L. 111-148) expansion of Medicaid “to non-disabled, working-age adults without dependent children was a clear departure from the core, historical mission of the program.”

Overall, Price and Verma emphasized their desire to grant states more freedom to design their own programs, but committed to retaining mechanisms to ensure state accountability, including budget neutrality in waivers and demonstration projects. To this end, the letter suggested fast-tracking waiver and demonstration project extensions and developing consistent guidelines for evaluating requests to waivers and demonstration projects that have already been approved in other states. Price and Verma plan to use “Section 1115 demonstration authority to review and approve meritorious innovations that build on the human dignity that comes with training, employment and independence.” Prior to serving as CMS Administrator, Verma was involved in crafting Indiana’s Healthy Indiana 2.0 expansion program. The program initially sought to impose a work activity requirement. CMS declined to approve the requirement linked directly to Medicaid eligibility, but allowed the state to encourage enrollees to participate in other voluntary state programs (see Amendment of Healthy Indiana Plan implements Medicaid expansion, Health Law Daily, February 11, 2015).

Price and Verma also noted the importance of maintaining public input processes and transparency guidelines, with respect to State Plan Amendments (SPAs) and other actions, expressed a desire to make the SPA process less burdensome. They discussed allowing states more time to comply with a 2014 Final rule regulating expanded access to home- and community-based services (see Final rule sets requirements for expanded home and community based services, Health Law Daily, January 16, 2014). They made suggestions for aligning Medicaid policies for non-disabled adults with commercial health insurance features to help them “prepare for private coverage,” including alternative benefit designs with aspects similar to health savings accounts (HSAs), designing emergency room copayments to encourage the use of primary and other providers for non-emergency care, and facilitating enrollment in employer-sponsored health plans. They also plan to work with states to combat the opioid epidemic, through state plans, the Medicaid Innovator Accelerator Program, and other methods.

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.