Friday, June 12, 2020

Covering the newly uninsured in New York: The BHP advantage

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My last post noted that Medicaid enrollment in New York spiked 2.6% in May and is up 4.2% since March. That's about mid-range among states for Medicaid enrollment growth since Covid-19 triggered mass layoffs.   Total enrollment in New York's mainstream managed Medicaid programs (about two thirds of total Medicaid enrollment in the state) increased by 177,858 from March to May, to 4,363,873.

New York's unemployment rate hit 14.5% in April. At 15% unemployment, the Urban Institute calculates that Medicaid enrollment in New York should eventually increase by between 641,000 and 1.1 million from pre-crisis levels, an increase of about 11-20%.  If a 4% increase as of May seems like a slow start, a new report by the United Hospital Fund analyzing Medicaid enrollment in New York during the Great Recession provides important context. 

From December 2007 to November 2009, as unemployment in New York more or less doubled from 4.8% to 8.9%, Medicaid enrollment increased by 10%, or 400,000. But Medicaid enrollment growth lagged behind job loss: "the fastest average increases in enrollment occurred approximately seven months after the fastest average increases in unemployment."*  

While Medicaid enrollment growth in New York so far seem modest compared to growth in Kentucky and Minnesota, the UHC report, citing growth in March and April, notes, "as the pandemic accelerated, Medicaid’s average monthly growth rate was four times as large as the average monthly growth rate during the Great Recession’s first twelve months."

Medicaid, moreover, is not the whole story. The Urban Institute estimates that approximately half as many of those who lose job-based insurance will find coverage in the ACA marketplace as in Medicaid. New York may do better than that, thanks to its Basic Health Program, the Essential Plan.

New York is one of just two states, along with Minnesota, to implement a Basic Health Program (BHP), an option for states established by the ACA.  A BHP is a health benefits coverage program for residents with incomes up to 200% of the Federal Poverty Level (FPL) who would otherwise be eligible for subsidized marketplace coverage. In the 2020 marketplace, 200% FPL is $24,980/yr for an individual, $33,820 for a couple, and $51,500 for a family of four.

BHPs, funded by the federal government at 95% the estimated cost of insuring the same target population in the ACA marketplace, were conceived as Medicaid-like plans, and that is what  the Essential Plan is. Participating insurers pay healthcare providers Medicaid rates plus 20%. the program is free for enrollees with incomes up to 150% FPL and has a premium of $20 per month for those with incomes in the 150-200% FPL range.  Out-of-pocket costs range from zero to minimal. It has proved a more attractive option for people in this income group than the marketplace in non-BHP states (excepting perhaps Massachusetts, which provides comparably affordable coverage to residents with incomes up to 300% FPL).

While the BHP is mainly thought of as an affordable option for people with incomes a notch above Medicaid eligibility, BHPs serve a second important constituency. Since 1996, federal law has barred legally present immigrants who have been in the country less than five years from federally funded Medicaid.  The ACA left the 5-year bar in place, but provided that legally present immigrants whose incomes would have qualified them be eligible for marketplace subsidies.

In states with no BHP (or extra state subsidies, as in Massachusetts), immigrants subject to the five-year bar whose household incomes are below 138% FPL pay 2% of income for a benchmark silver plan in the ACA marketplace, enhanced with Cost Sharing Reduction (CSR). In New York, immigrants in that situation get the Essential Plan for free. That's a huge advantage: while premiums and out-of-pocket costs for CSR-enhanced silver plans for enrollees with incomes below 138% FPL are comparatively low**, many people at that income level find the costs prohibitive.

The Essential Plan was a boon to New York's finances as well as to the finances of enrollees. Since 2001, in compliance with a state court ruling, New York had been offering Medicaid enrollment to immigrants subject to the federal 5-year bar, bearing the full cost. In April 2015, the state transferred 225,000 such enrollees into the newly established Essential Plan, at which point the federal government assumed virtually the full cost.

The Essential Plan's low premiums and out-of-pocket costs have massively boosted enrollment among New Yorkers with incomes in the 138-200% FPL range, as well as among immigrants subject to the 5-year bar. As of Feb. 7 this year, the program had 796,998 enrollees. In 2019, 39% of enrollees were immigrants who would have qualified for Medicaid if they were not subject to the 5-year bar for federal funding -- that is, they had incomes under 138% FPL.   As that ratio has probably not changed (a breakout for 2020 is not yet available),  enrollment at the 138-200% FPL income level was about 486,000 in February.  In 2015, prior to the opening of the BHP to people in this income range, marketplace enrollment at 138-200% FPL was about 166,000.  Enrollment in this income range has thus just about tripled.  Enrollment among legally present noncitizens increased by about 73% from April 2015 to February 2020, from 225,000 to 310,000.

By contrast, in the 38 states that were using the federal platform,, in 2016, enrollment at 100-150% FPL is down 10% since 2016.  In New York, enrollment at incomes over 200% FPL (where marketplace eligibility begins) has risen just 9% since 2015, from about 249,400 to 272,998.

The Essential Plan, like the ACA marketplace, provides immigrants subject to the five-year bar with a measure of insulation from Trump's cruel and counterproductive expansion of the Public Charge rule. As recently finalized, the rule potentially impairs the immigration status of noncitizens who enroll in Medicaid, whereas marketplace or BHP enrollment do not count as public charges. For immigrants subject to the five-year bar whose income drops into Medicaid range as a result of the pandemic, as for people in this situation generally, takeup of the Essential Plan  is likely to be higher than takeup of marketplace coverage in other states.

Enrollment in the EP is also easier at present than marketplace enrollment in most states. In the 38 states that use the federal exchange,, those who lose job-based coverage now (or any time outside of Open Enrollment, Nov. 1 - Dec. 15) must apply for a Special Enrollment Period (SEP) as a prelude to applying for marketplace coverage. Essential Plan enrollment, like Medicaid enrollment, is open year-round. (New York's state-based exchange has in any case opened an emergency SEP to all comers, scheduled to end on June 15. Eleven other state-based exchanges also opened emergency SEPs, though most have expired by now.)

In summary, while the 35 states that have enacted the ACA Medicaid expansion offer truly affordable coverage to most of the newly uninsured whose incomes are below 139% FPL, New York offers comparably affordable coverage to a higher threshold, 200% FPL.  The state may accordingly manage to provide coverage to a higher percentage of the newly uninsured than most.

[UPDATE, 9:10 a.m.:  Essential Plan enrollment increased 2% from February 27 to May 23, from 797,000 to 813,000, according to NY Dept. of Health spokesman Jeffrey Hammond

For more on the UHF report and current financial pressures on Medicaid in New York, see Jonathan Lamantia's coverage in Modern Healthcare. My thanks to Dr. Bradley Flansbaum for alerting me to Lamantia's article.


*The UHF cites several potential reasons for the lag between job loss and Medicaid enrollment:
unemployed individuals may have received short-term health coverage from severance packages or from other sources such as COBRA plans, which were subsidized for up to 15 months under the American Recovery and Reinvestment Act of 2009 (ARRA). Some of these individuals became more likely to enroll in Medicaid as those temporary sources of coverage expired or became unaffordable, and as their household incomes fell beneath Medicaid eligibility thresholds, such as when unemployment insurance (UI) benefits were exhausted. Others may have enrolled in Medicaid after spending down resources (prior to New York’s removal of asset tests) or losing access to family coverage, if a spouse also became unemployed.
Enrolling in Medicaid during the Great Recession was far more difficult than  it is now. There were asset limits for parents and childless adults (reduced in 2008, eliminated in 2019, and an in-person interview was required until 2010. Fingerprinting was required until July 2009, and drug/alcohol screening was eliminated in May 2008. Finally, the ACA expanded enrollment eligibility for adults to 138% of the Federal Poverty Level, up from 100% FPL during the Great Recession.

** For enrollees with incomes up to 150% FPL a CSR-enhanced silver plan in the ACA marketplace has an actuarial value of 94%, meaning it is designed to cover 94% of the average enrollee's medical costs. In 2020, the average deductible at this income/metal level was $209 and the average annual out-of-pocket maximum was $1,187. 

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