Tuesday, February 11, 2014

Don't call it Medicaid: Don Taylor on expanding health insurance in the South

In yesterday's long look at the likely future of the ACA, one somewhat submerged sub-theme was that much of whatever change comes to the ACA is likely to be state-based.  The Obama administration has proven itself willing to bend far in granting state waivers for privatized Medicaid expansions. Broader waivers enabling states to submit plans to meet ACA coverage goals by alternative means will be available starting in 2017. The law's federalist structure is both a strength and a weakness -- enabling the stonewalling and sabotage we've seen so far, but also, via state waivers, state-specific redesigns more in keeping with a state's political culture.

Don Taylor's fascinating take on the cultural barriers to extending health insurance access in the South came toward the end of a very long piece. Allow me to re-present that section below.

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For Taylor, a lifelong southerner, the imperative to expand health insurance access in the South is personal. Taylor has sketched out various visions of long-term progressive-conservative compromise on healthcare reform (here's one) and has submitted detailed proposals to the North Carolina legislature for privatized Medicaid expansion. The chief inducement for Democrats to negotiate, he suggests, is to cover the 25-30 million people that the ACA leaves out.

 "If I were to argue for negotiation from a pro-ACA perspective," Taylor said, "I'd be most worried about the uneven rollout, with the South left out.  I'd look to come up with some way to make the South willing to expand insurance coverage." He adds that there's probably no way to do this between now and the next election in 2014 in states that haven’t already starting moving that direction.

From a policy standpoint, I suggested, progressives should be committed to getting all Americans covered. But might there be a certain political logic for Democrats to let the states diverge, let the South suffer on its own terms?  Speaking as a southerner, Taylor said, he could only respond, "a lot of people are gonna get hurt by that."

"When I first read the Supreme Court ruling" upholding the ACA but making the Medicaid expansion optional, Taylor said, "I remember thinking, usually in the South we say we hate the feds while we cash the checks. In many ways, Roberts called the bluff of the South. If you hate the federal government, don't take the money. It's up to people who live in the South to make the case why we have to do this thing."

He's tried hard to make the case in southern terms, embracing privatized Medicaid expansion although it's more expensive and the benefits are skimpier than in Medicaid as we know it. It's the only way, he suggests, because Medicaid is anathema in the South. The dominant response, he says, boils down to "Medicaid is poor people's insurance and we don't want to do it."  Speaking from experience, he adds, "Let's say North Carolina was gonna cook a deal to do expansion -- you'd never call it Medicaid.  The term is not quite as bad as "Obamacare," but it's creeping up on it. Whenever I talk to someone in the North Carolina legislature, I try to make the point that Medicaid is not one monolithic program, it's many programs—kids, adults, the disabled, the dual eligibles, all with different needs."  Just don't call them Medicaid beneficiaries.

There's a power imperative to get the Medicaid expansion done, Taylor said. "Now you could have such a major expansion of insurance coverage in a way so advantageous. If you pass this up, there's no way poor states will do something like this on their own.  Medicaid expansion is not that consequential in California or Massachusetts [where eligibility was already extensive pre-ACA], but in North Carolina, you could cover a half million people in a year, and that's a huge change. You can leverage $4.1 billion in federal money in 2016 alone. It's painful to watch that deal go begging."

Hence his own proposal for North Carolina to use Medicaid money to offer a private "Basic Health Plan" (BHP, a little-known ACA option) to people with incomes ranging from 0 to 200% FPL.  With respect to federal waivers authorizing such use of the Medicaid expansion money, Taylor said, "I'm sure there's something the administration would say no to -- we should find out what that is. The administration is desperate to say yes."

[Regarding the long-term development of the ACA], Taylor suggests that even an enacted reform cannot endure long-term as the sound of one hand clapping. "It is not viable for something so vital as health reform to be the purview of one party alone. For a variety of reasons, both sides need a deal."

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Postscript: Taylor has a Feb. 7 post suggesting that an unintended consequence of the Supreme Court decision making the ACA-mandated Medicaid expansion voluntary may, ironically, enable his proposal for a privatized Medicaid expansion in North Carolina.  He proposes leveraging an unintended consequence of  an ACA provision allowing states to create Basic Health Plans (BHPs) for people with incomes too high for Medicaid but under 200% of the Federal Poverty Level (FPL). BHPs are supposed to be tailored to the needs of lower-income people, similar to Medicaid managed care, which means they must provide care while demanding very low out-of-pocket costs from participants.  According to the ACA's original design, they would be available only to people with incomes between 138% FPL, below which they would qualify for Medicaid, and 200% FPL. Taylor suggests that in a state that has refused the Medicaid expansion, eligibility for the BHP should extend all the way down to 0% FPL -- that is, to any adult in the state not eligible for Medicaid under existing law.

It strikes me that while Taylor is focused on likely conservative changes to the ACA -- the only kind that will fly in the South -- his attempt to find malleability in BHP eligibility requirements also suggests a route for other states to amend the ACA leftward.  That is, a state could seek waivers to extend BHP eligibility upward -- to 400% FPL, or to all comers, subsidized or unsubsidized. That would make of the BHP...a public option.  A Kaiser Family Foundation report on BHPs' likely role in the healthcare ecosystems suggests that BHPs will likely pay providers at Medicaid rates or somewhat above:
States with Medicaid managed care programs may look to Medicaid managed care plans and networks as the delivery system for the BHP. These plans offer an existing infrastructure and also accept lower reimbursement rates than commercial plans, which will enable states to offer coverage through the BHP with the available federal funding. States may, however, need to enhance provider rates above Medicaid levels to ensure the plans are able to offer robust provider networks....

Finally, while BHP offers states considerable flexibility  in selecting the provider networks and determining reimbursement strategies, the reduced  federal funding creates incentives to rely on safety net and other traditional Medicaid providers and health plans, which typically are reimbursed at lower rates than commercial providers and plans.
As mentioned above, participants' out-of-pocket costs are held very low:
Enrollee cost-sharing cannot exceed the equivalent  platinum plan for individuals with incomes below 150% FPL, and the equivalent gold plan for  individuals with incomes between 150%-200% FPL, which have actuarial values of 94% and  80%, respectively. If offered by a health insurance issuer, BHP plans must have a medical loss ratio greater than 85%.
At the same time, BHPs are expected to used managed care techniques to control overutilization:
The ACA requires that BHP utilize managed care plans or “systems that offer as many of the
attributes of managed care as are feasible.” This may include licensed HMOs, a licensed health
insurer, or a network of health care providers “established to offer services under the
program.” States must use a competitive selection process and include care coordination and
incentives for use of preventive care within the BHP offerings
It seems to me that a state obtaining a waiver to remove the income cap on BHP eligibility would be on track to create a strong public option with powerful control over pricing.

Have I buried another lede?



2 comments:

  1. Angling for a job with Ezra's Klein's new outfit? :) Seriously, this is great reporting.

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  2. Thanks for another good post. Don Taylor is a very fair commentator.
    I would be less charitable toward the South, personally.
    Several of the states hate and fear Medicaid because it might make them have to adopt an income tax.
    In other places, Medicaid is feared because it would make poor people more comfortable staying down South. The South has been exporting poor people to New York, Wis, Ill, Cal, etc for 80 years.

    As Bill Maher once said, "The role of the Democratic Party is to drag the hillbilly half of America into the 21st centurty."

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