Wednesday, February 24, 2016

What would it cost a state to offer something like Medicaid to all its uninsured?

At, I look back at a state-wide proposal to create what I've called an "all-public option" for the ACA -- that is, an exchange in which all the insurers operate like Medicaid managed care companies, paid directly  by government. Here I want to outline a few factors involved in funding such a plan.

Here's the basics from the post:
In November 2009, before the ACA was passed, a New York nonprofit, Community Service Society, produced a plan for the state that would have done just that -- and then some, as it would have given employers the option of buying in. (In 2013, CSS produced a plan outline and cost estimate for the state's BHP that did a good job scoping out the costs and target population as it actually played out, )

Authored by  Elisabeth Benjamin, CSS's VP of health initiatives, and Arianna Garza, the Cornerstone for Coverage Plan  would have used New York Child Health Plus plan (CHP), which was the prototype for the national Children's Health Insurance Program, as the building block of a low-cost public program available not only to the uninsured but to the underinsured. Here is the core proposition:

Cornerstone would be available to all children, adults, and employers in New York. By extending the residency rules of the existing CHP program to all New York adults, every New Yorker below the age of 65 would be given the option to participate in the program with sliding-scale premiums based in income.35 The recently enacted employer and union buy-in to the FHP program would be available to all employers in New York State. This would allow all employers and small businesses to leverage the purchasing power of the State to get affordable coverage for their workers.

 Cornerstone extends the existing rules in the State’s CHP program. As with CHP, all uninsured New York State residents up to age 65 would be eligible on a sliding scale basis, regardless of immigration status.
New York has since taken half this loaf by forming a Basic Health Plan (BHP) under the ACA - -that is, a Medicaid-like plan offered to state residents with incomes up to 200% FPL who would have been eligible to buy subsidized private plans in the state exchange had the BHP not been formed. The BHP, dubbed the Essential Plan, is free to those with incomes up to 150% FPL and $20 per month for those in the 150-200% FPL range. Cost-sharing is minimal.

The 2009 Cornerstone plan, I suggested, could be adapted and updated by extending the Essential Plan.  The ACA empowers states to propose alternate schemes to provide affordable insurance to their residents, provided the alternative meets the ACA standards for affordability and comprehensive coverage. To fund approved schemes, the federal government will provide funding equivalent to what it would have paid to provide subsidies to the enrollees in the state's conventional ACA marketplace.  In a rather perverse incentive, if private insurance premiums in the state rise, funding for the alternative program rises accordingly. Since New York's private plan premiums are among the highest in the country, it has some running room.

Could New York use such an "innovation waiver" to implement something like all or part of the Cornerstone plan? That is, to offer the Essential Plan either to residents with incomes up to 400% FPL, or to all residents who lack employer-sponsored insurance, or even to employers and employees who wanted to buy in?

Obviously I don't know how much it would cost New York to extend Essential Plan eligibility in one of the ways outlined above. Really modeling one or more options would be complex and require some funding. But here are a few factors.

If eligibility were extended only to 400% FPL, new enrollment would probably well exceed the current 260,000 enrolled in New York's current private plan marketplace, because those who have balked at the price of private plans would have access to truly affordable insurance. Perhaps 400,000 would enroll, with federal funding equivalent to the subsidies that most enrollees would have received for private plans in the current ACA marketplace.

The funding issues might be complicated, for better or worse, by the way funding for the BHP played out. The  Essential Plan, was funded in part by a windfall. In 2001, upholding plaintiffs in the Aliessa lawsuit, New York's high court ordered the state to provide Medicaid to financially qualified legally present noncitizens who were subject to the federal "5-year bar" on Medicaid eligibility, enacted in the 1996 welfare reform law. From 2001 through 2014, the state provided Medicaid to those citizens at its own expense.

While the ACA did not remove the federal 5-year bar, it did allow those subject to it to qualify for subsidies to buy private plans on the ACA exchanges, even if their incomes qualified them for Medicaid. Accordingly, the feds would fund BHP enrollment for that population. New York seized on that opportunity.

In April 2015, the state transferred 225,000 noncitizen Medicaid enrollees to the the BHP, garnering a cool billion annually in federal funding in the process. For the rest of the BHP enrollees, however -- those not transferred from Medicaid (there are about 160-175,000 of them), federal funding only covered a bit more than three quarters of the cost - $504 million out of $654 million, according to a budget presentation posted on the state ACA exchange.

A BHP allows for more affordable and comprehensive coverage than a private plan, because the MCOs pay something close to Medicaid rates to providers (the downside is a network limited to providers willing to accept those rates). But those savings, while significant, have their limit. In Minnesota, a proposal to extend eligibility for the BHP, MinnesotaCare, to 275% FPL would cut the actuarial value of the plan for the highest-earning enrollees (250-275% FPL) to 73%. That leaves a lot of cost-sharing for the enrollee (though presumably less at the near-Medicaid rates MinnesotaCare probably pays than at the comparable share of a private plan). On the other hand, New York's BHP is more richly funded by the feds than Minnesota's, because premiums are much higher in New York than in Minnesota, and so the federal funding per enrollee is much higher.

CSS, author of the Cornerstone plan, wants to build on the ACA in a different direction -- in effect, down the income scale rather than up. In January, the organization released a plan to open the Essential Plan (at state expense) to undocumented aliens, and to some legally present noncitizens who are barred from both the BHP and the marketplace. CSS forecasts that roughly 111,000 uninsured noncitizens would take up the offer, at an estimated annual cost to the state of $462 million. The proposal also offers more limited options. Insuring the undocumented is also a new plank in Hillary Clinton's health reform platform. But that, unlike her proclaimed receptivity to state-initiated public options, would require legislation. Passing such legislation at this stage of our political development (or degeneration) seems about as likely as passing Sanders' single payer plan.

1 comment:

  1. As I have stated before, I love buy-in programs. We almost had a Medicare buy-in for ages 55 to 65 before the Senator from Aetna (Leiberman) betrayed liberals in 2009.

    Anyways, I would love to know more about how your program idea would work.

    Let me try a few examples.....criticism is very welcome.

    The Minnesota Care Program (a Basic Health Plan) has an average cost of $450 a month per enrollee.
    (I do not know how many children are in the plan or how their costs are factored in.)

    This cost occurs despite vigilant managed care and low payments to providers. (there is a lesson there, but let's move on.)

    Now say you are a 35 year old single male in MN making $35,000 a year.

    You do not get a tax credit.

    Will the buy-in require you to pay $450 a month out of your modest income for the Basic Health Plan? I think it would have to in order to remain budget neutral.

    Now move a a 60 year old single man making $35,000. He gets a $225 tax credit today. In a buy-in, he could add just $225 of his own money and get a no-deductible health plan.

    Great! where do I sign up?

    Tell me if I am on the right track here.Bob