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.

Medicaid fills a space for children with special health care needs

Medicaid is the sole source of coverage for 36 percent of children with special health care needs, according to a Kaiser Family Foundation (KFF) Issue Brief. Public insurance, like Medicaid, is important for many children with special health care needs because the Medicaid program covers medical and long-term care services that are either not covered or subject to limited coverage through private insurance. The proposed restructuring of Medicaid financing would likely impose limits on the scope of benefits available to all Medicaid beneficiaries. The KFF believes that Medicaid reform should carefully evaluate the potential impact on children with special health care needs.

Special Health Care Needs

HHS reports that nearly 20 percent of all U.S. children under 18 years of age have special health care needs. Additionally, one in five U.S. families has a child with a special health care need. HHS defines special health care needs as applying to children who  “have or are at increased risk for chronic physical, developmental, behavioral or emotional conditions and who also require health and related services of a type or amount beyond that required by children generally.” Special health care needs stem from conditions including Down syndrome, cerebral palsy, depression, anxiety, and autism. Children falling under the definition have multiple and varied needs. For example nearly 70 percent of children with special needs have difficulty with bodily functions such as breathing, swallowing, or chronic pain. Children with special health care needs often have conditions which require nursing, therapy, and mental health counseling services.

Demographics

The majority (73 percent) of children with special health care needs live in low or middle-income families. This means that 73 percent of children with special health care needs live in families with incomes below 400 percent of the federal poverty level. Of the 11.2 million children with special health care needs, 59 percent are white, 16 percent are black, 17 percent are Hispanic or Latino, and 8 percent fall into other racial or ethnic categories.  Forty-one percent of children with special health care needs are between 12 and 17 years old, 39 percent are between six and 11 years old, and 21 percent are between zero and five years old.

Eligibility

The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) required states’ Medicaid programs to cover children in families with incomes up to 138 percent of the federal poverty level. However, all states expanded financial eligibility for children above that level. As of January 2017, the median eligibility for Medicaid and CHIP children is 255 percent of the FPL. States may also make children who receive federal Supplemental Security Income (SSI) benefits eligible for Medicaid. Such children reside in poor families and are disabled in a way that severely limits their ability to function at home, school, and in the community.

Coverage

Regardless of whether a state chooses to cover such services for adults, children are eligible for Medicaid’s Early and Periodic Screening Diagnostic and Treatment (EPSDT) benefit, which includes regular medical, vision, hearing, and dental screenings as well as other services necessary to “correct or ameliorate” physical or mental health conditions. Additionally, because private insurance is designed to meet the health care needs of a generally healthy population, Medicaid can fill the gap to provide care related to more intensive and chronic needs.

Conclusion

Medicaid provides a board scope of services and coverage to children with special health care needs. For many families, Medicaid serves as an important source of insurance and a means to fill gaps presented by inadequate private insurance. As a result, lawmakers should be cautious when evaluating Medicaid reforms to consider the impact such restructuring could have on children with special health care needs.