Wednesday, January 03, 2018

In which Idaho offers a quarter loaf to its uninsured poor

Thanks to Dylan Scott for flagging a draft ACA innovation waiver proposal published by the Idaho Department of Insurance this past November. Someone in the ensuing Twitter stream called the proposal "creative" -- and it is, in the sense that repeal of the ACA individual mandate is creative. That is, it "saves" money by insuring fewer people at higher per-person cost than the ACA default structure -- in this case, proposing a private alternative to Medicaid expansion.

More specifically, the proposal would newly insure one fifth as many Idaho residents as would Medicaid expansion at about one third of the added cost. That's notwithstanding the fact that while Medicaid expansion would cost about $300 million more per year in total than the status quo arrangement, the federal government would pay five sixths of the added cost.*

That's genuinely creative when you allow that the more cost-effective alternative -- Medicaid expansion -- has proven to be a political impossibility in the state. It's also an implicit confession that a Republican state government prefers to spend more per person while leaving a larger percentage of its population uninsured -- without any attempt to argue that the more-expensive insurance is better for enrollees or yields other social (as opposed to ideological) benefits.

The Idaho proposal combines a Medicaid Section 1115 waiver with an ACA Section 1332 innovation waiver and has three parts:

1. Make residents with incomes up to 100% of the Federal Poverty Level (FPL) -- currently denied any aid because of the state's refusal to expand Medicaid -- eligible for subsidized marketplace coverage. Enrollees in this income group would be offered the deal currently available nationwide to legally present noncitizens subject to the federal 5-year bar to Medicaid coverage**: A benchmark silver plan, enhanced by Cost Sharing Reduction, would cost them 2% of their annual household income and have an actuarial value of 94% (which translated in 2017 to an average deductible of $255, according to the Kaiser Family Foundation).

2. Create a new Medicaid category for people with complex medical needs who would otherwise be eligible for subsidized marketplace coverage, i.e. those with incomes from 0-400% FPL. These enrollees would be federally funded at the state's current federal match rate of 71.7%. Their removal from the marketplace risk pool would dramatically reduce premiums, and thus subsidies, according to the proposal.

3. Continue Idaho's existing high risk pool, in which, as of Jan. 1 of this year, insurers can cede to the state enrollees with designated high-risk medical conditions. (Since the state picks up the full cost of this program, I'm not sure why it's included in the draft waiver proposal.)

Parts 2 and 3 are projected to dramatically reduce federal and state spending on private coverage. The Medicaid high risk program is projected to take just 1000 people out of the marketplace -- but to drop federal subsidy costs for those currently eligible (income range 100-400% FPL) by 23%, from $615 million to $473 million.

The two high risk programs could be proposed and implemented independently of Part 1, however, which is a straight-up swap of Medicaid coverage (available at a 90% federal match rate if the state implemented the expansion) for heavily subsidized marketplace coverage. And that swap is a terrible deal -- for the prospective enrollees and for the state. The proposal confesses as much.

The state projects that the proposed "private option" would newly insure 22,000 people with incomes under 100% FPL, currently left out in the cold by the state's refusal to expand Medicaid. That's compared to 79,000 who would access coverage under the Medicaid expansion. Their coverage would cost a projected $6,700 per person -- as opposed to $4,000 under Medicaid. Covering 79,000 via Medicaid would cost $326 million, with 90% picked up by the federal government. Covering 22,000 via marketplace would cost $146,000 -- but with the feds paying 100%.  The state, by its own calculation is declining to cover 57,000 people below the poverty line at a state cost of about $33 million.

The state also projects that under the waiver, marketplace enrollment in the 100-138% FPL income band will remain unchanged at 21,000, compared to 40,000 who would enroll in Medicaid under expansion. That near-doubling of insured lives would cost just $27 million ($166 million to insure 40k versus $139 million to insure 21k), with $17 million picked up by the state. (The state share is disproportionately high because the federal government pays 100% of marketplace subsidies but 'only' 90% of Medicaid expansion premiums.)

Altogether, then, the state is foregoing the opportunity to increase the insured population by some 77,000 more via Medicaid expansion than it would under the waiver proposal, at a cost of under $50 million to the state. That's less than $650 per person.

Viewed another way, the state prefers to boost the insured population by 21,000 at no cost to itself to boosting it by 98,000 at a state cost of $50 million.

What is the benefit to the state or its residents of opting for subsidized marketplace coverage for its poorest residents, rather than Medicaid? The proposal addresses that question:
Idaho’s challenge is to increase coverage options and affordability for working-age Idaho residents who are not offered employer-sponsored health coverage, while keeping state and federal spending under control. Solutions to this challenge must also be viable politically and philosophically within Idaho – emphasizing flexibility, accountability for able-bodied Idahoans in the form of cost-sharing, and controlling costs while not increasing entitlement programs.
Tonally, it's not clear to me whether the proposal's authors are voicing state ideology out of conviction or merely bowing to it of necessity. But taken at face value...

It's touching that Idaho wants to control federal costs, albeit at the expense of state residents' welfare. As for providing "flexibility" and "accountability," by the state's own estimate, almost three quarters of those offered private plans for 2% of income will say no thanks. While this population is lauded as "hardworking Idaho households," the state apparently considers them too louche to embrace an offer that the state purports to find affordable and appropriate.  

The proposal does not spell out why it projects such low takeup of 94% AV coverage by people below the poverty line. Takeup is much higher in nonexpansion states by people in the 100-150% FPL income band, for whom CSR-enhanced silver plans also have a 94% AV (in 2015, 76% of eligible people in this income band enrolled in marketplace coverage, according to Avalere Health). But Idaho's estimate is not necessarily implausible. A Kaiser Family Foundation review of 65 papers examining the effects of cost sharing on Medicaid and CHIP enrollees found that premiums serve as a barrier to obtaining and maintaining Medicaid and CHIP coverage:
For example, in Oregon, nearly half of adults disenrolled from Medicaid after a premium increase with a maximum premium amount of $20, with many becoming uninsured and facing barriers to accessing care, unmet health needs, and increased financial burdens.70,71,72 Similarly, a more recent study of the Healthy Indiana Plan waiver program for Medicaid expansion adults with incomes below 138% FPL, which requires premiums that range from $1-$100 to enroll in a more comprehensive plan, found that 55% of eligible individuals either did not make their initial payment or missed a payment.
Still, the projection that just 22,000 out of 78,000 eligible uninsured people below the poverty line will take up the private insurance offer seems a bit odd, as does the projection that the entire uninsured population below the poverty line will enroll in Medicaid (especially with the ACA's individual mandate repealed).

The working assumption undergirding the proposal seems to be that it's morally imperative to offer "hardworking" families with income below the poverty line insurance that costs more than most feel they can afford, ensuring that over 70% of them remain uninsured. That's echt Republican.


* While the federal match rate for Medicaid expansion enrollees is 90%, expansion would also put an estimated 21,000 current marketplace enrollees in Medicaid -- and for them, the state pays nothing at present.

** The ACA as drafted envisioned all states expanding Medicaid to adults in households with incomes up to 138% FPL. While citizens with incomes below 100% FPL were (and are) ineligible for marketplace subsidies, an exception was made for legally present noncitizens who are subject to the federal "5-year bar" from Medicaid eligibility, or subject to even longer state-imposed waiting periods. Noncitizens in this situation can obtain marketplace subsidies if their income is below 100% FPL. In states that refused the Medicaid expansion (after the Supreme Court gave them that option in 2012), they are the only people in that income category who are eligible for federal aid of any kind. 

1 comment:

  1. IF a premium of $20 a month causes half of Medicaid recipients to reject comprehensive, first dollar, no-deductible coverage, that is pretty depressing.
    I know that there are people trying to live on $700 a month in welfare and SSDI payments, and they do not have an extra nickel anywhere. I get that.
    But is that half the Medicaid group? I just do not know.