Boosting ACA coverage in a time of mass unemployment: State options

Subscribe to xpostfactoid via box at top right. You'll get 2-3 posts per week, mostly re ACA.

In the past five weeks 26 million Americans have lost their jobs. Could national impoverishment prepare a path to universal health coverage?

When tens of millions of household incomes shrink toward the poverty level, tens of millions will become eligible for Medicaid. If double-digit unemployment persists for many years, the program may be upgraded by popular demand and its eligibility threshold may creep up by degrees.

All bets are off if Trump is reelected, as Republicans are sworn enemies of Medicaid. Their 10 years' war against the ACA has at bottom been a drive to defund Medicaid -- roll back the ACA eligibility expansion, impose block granting or per capita caps on remaining Medicaid programs, and throw up barriers to enrollment like work requirements and frequent "redeterminations" of eligibility.  If Republicans regain control of Congress as well as the presidency any time soon -- or neutralize Congress under authoritarian rule -- they'll doubtless succeed in shrinking and hollowing out the program.

If they don't, Medicaid will remain funded, and it stands ready to catch a hefty proportion of the newly unemployed in the 36 states that have enacted the ACA Medicaid expansion. Total enrollment is likely to increase by 16.5 million to about 87 million according to the mid-range estimate in an analysis by Health Management Associates. With no end to our coronavirus exposure in sight, we are probably looking at double-digit unemployment for the foreseeable future. Elevated Medicaid enrollment may persist.

If Democrats win the presidency in 2020, but lack power or will to enact sweeping new coverage expansions, Medicaid coverage, perhaps under different names, will likely expand further.

Blue states looking to avoid (or roll back) massive increases in their uninsured population should look closely at existing state programs that extend Medicaid-like coverage up the income ladder.  There are two existing models that states might follow.

Are New York's Essential Plan and Minnesota's MinnesotaCare threatened by CSR fund cutoff?

A question hath arisen on Twitter: if federal Cost Sharing Reduction (CSR) reimbursements to insurers are cut off, either by Trump administration fiat or court ruling, would New York and Minnesota's Basic Health Programs formed under the ACA lose the portion of their federal funding derived from CSR payments?

To review, the ACA gives states the option of establishing a Basic Health Program (BHP) for qualifying residents with incomes between 138% and 200% of the Federal Poverty Level -- the very population eligible for strong CSR in the ACA marketplace in a state with no BHP*.   A BHP is designed to have low premiums and high actuarial value -- though not necessarily higher than that provided by CSR. So far, Minnesota and New York are the only states to have formed BHPs.  New York's BHP, the Essential Plan, has minimal cost sharing and a maximum premium of $20 per month (for those in the 150-200% FPL range). MinnesotaCare premiums top out at $80 per month; the actuarial value is 94%, matching CSR for marketplace enrollees with incomes up to 150% FPL.

Section 1331 of the ACA provides for federal funding of BHPs according to this formula:

The amount determined under this paragraph for any fiscal year is the amount the Secretary determines is equal to 85 percent [amended to 95%] of the premium tax credits under section 36B of the Internal Revenue Code of 1986, and the cost-sharing reductions under section 1402, that would have been provided for the fiscal year to eligible individuals enrolled in standard health plans in the State if such eligible individuals were allowed to enroll in qualified health plans through an Exchange established under this subtitle.

Give PriceCare to the not-poor

As I noted last week, Tom Price's 2015 ACA repeal-and-replace bill, dubbed the Empower Patients First Act, is a grossly inadequate offering for the 20-plus million mostly poor and near-poor people who have so far gained health insurance through the Affordable Care Act.  Its limited premium subsidies for shoppers in the individual market, adjusted for age but not income, would leave coverage unaffordable for most of the 9 million subsidized enrollees in the ACA marketplace. Worse, by repealing the ACA's Medicaid expansion, it would un-insure virtually all of the roughly 12 million who have gained coverage through the ACA's expansion of eligibility.

Price's EPFA does, however, provide significant aid to those who earn too much to qualify for ACA marketplace credits -- which includes some younger buyers with incomes as low as 250% FPL and a considerable number in the 300-400% FPL range. Insurance seekers who are subsidy-ineligible (or close to it) but not wealthy fare worst under the ACA, as the Urban Institute's Linda Blumberg and John Holahan have highlighted:

Price's subsidies would cover, on average, about 40% of the premium for the average benchmark silver plan offered in the ACA marketplace, and a higher percentage of the premium for the skimpier plans that would be on offer in the deregulated individual market his replacement bill would create. Coupled with an HSA, and possibly with full tax deductibility for any plan purchased in the individual market (as Trump's campaign website proposed), and with continuous coverage protection, it's a program that could work for the modestly affluent (at least, with some compromise preserving essential health benefits as a broad outline while giving states more autonomy to flesh them out).

The public option is inside out

The public option is back in the ether, though it's hard to see a path by which it may walk this earth. Hillary Clinton has reiterated her verbal support for it as part of her package of Bernie mollifications. Obama has also floated a kind of public option ghost, to haunt only those ACA markets where competition is scarce. Democratic yearning is in high gear.

The public option is designed to mitigate the fact that a private, subsidized insurance marketplace expands the very sector of our healthcare system that pays healthcare providers the highest rates. While a "strong" public option would pay Medicare rates, private insurers typically pay probably more than 150% of that, at least in the employer-sponsored market (many do pay less, some much less, in the ACA marketplace).

Insurers understandably don't like a public option because it would put them up against a competitor that pays less for the care they retail than they typically do. That would seem, in many ACA markets, an impossible task. Competition can't force insurers to charge lower premiums when premium revenue is less than medical payments, as it is in some ACA markets.  Competition is great if it pushes insurers' medical loss ratios from 80% to 85%; it's futile if it pushes them from 87% to 92% or 102% or 120%.

Thus a public option is pushing on a string -- or at best, pushing insurers toward ever narrower networks.

Perhaps what's needed is for the government to set affordable rates, or take bids within a given rate range, and invite the insurers to compete on that basis. That's how Medicare Advantage works, and also how Medicaid managed care programs work, with some important differences in how bidding is structured.

Hawaii's ACA enrollment mystery

In the 38 states using HealthCare.gov, the federal ACA marketplace, just 3% of enrollees have incomes below 100% of the Federal Poverty Level (FPL), a threshold below which most applicants are ineligible for premium subsidies.  In Hawaii, 29% of enrollees have incomes under 100% FPL. No other state has more than 4% of enrollees in that income category. What gives?

Under the ACA, legally present noncitizens who are barred from Medicaid are eligible for private plan premium subsidies even if their income is below 100% FPL.  The 1996 welfare reform legislation barred legally present noncitizens from federally-funded Medicaid eligibility if they had been in the country less than five years.  While subsequent legislation gave states the option of covering children and pregnant women with a federal contribution, the bar is still in place for most adults.

While those subject to the five-year bar (or even longer-term bars passed by some states) make up the bulk nationally of subsidized ACA enrollees under 100% FPL, there are other categories of legally present noncitizens barred from federally funded Medicaid. Hawaii home to a substantial share of one such group: Pacific islanders who are legally present under the Compact of Free Association. (COFA) which governs relations between the U.S. and three Pacific Island Nations -- the Federated States of Micronesia, the Marshall Islands, and Palau. The federal government will not fund Medicaid for COFA residents.

How's New York's ACA marketplace doing? (updated)

In Kaiser's newly updated estimates of  the percentage of potentially eligible residents each state has enrolled in health plans through its ACA marketplace, New York gets short shrift.

According to Kaiser's measure, New York's health exchange is at just 26% capacity. But that's because the state launched a Basic Health Plan (BHP) that provides ultra low-cost insurance* to residents with incomes up to 200% of the Federal Poverty Level (FPL) who are not eligible for Medicaid. About 155,000 enrollees in the BHP (dubbed the Essential Plan) would have been eligible for subsidized private plans had the state not launched the BHP.

As I mentioned yesterday, Kaiser's more meaningful measure is the percentage of the subsidy-eligible population that each state has enrolled in subsidized private plans (because those who don't qualify for subsidies mainly buy off-exchange).Kaiser updates that metric bi-annually, but hasn't done so yet in the wake of the 2016 enrollment period. But based on its last estimate of the subsidy-eligible population in each state, we can take a stab at New York's current success rate.

Last September, before New York launched the Essential Plan, Kaiser estimated that the state had 532,000 residents potentially eligible for private plan subsidies. The Essential Plan currently has 379,559 enrollees. But 225,000 of them are in a special category: they are legally present noncitizens that the state was previously enrolling in Medicaid purely on its own dime (see note below**). Roughly 155,000 Essential Plan enrollees would have fit Kaiser's "potentially eligible population" for subsidized private plans last fall. In fact, most of them probably were in private plans.***

In addition, in 2016, New York enrolled 271,964 residents in private plans through its ACA exchange. According to HHS' spreadsheet of state level data, 54% of those private plan enrollees were subsidized, or a little shy of 147,000.  Add that to the 155,000  Essential Plan enrollees who would have been eligible for subsidized private plans last year, and approximately 302,000 enrollees in the two programs meet Kaiser's "potentially eligible" criteria.  That's 56.7% of 532,000, Kaiser's previous "subsidy-eligible" estimate. In other words, about 57% of New York's population that would have been eligible for subsidized private plans as of last fall are now enrolled either in such plans or in the Essential Plan [updated and corrected, 3/19 -- previously I missed the spreadsheet data].

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

At healthinsurance.org, 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 healthinsurance.org 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:

Minnesota to consider extending public health insurance to most of those eligible for ACA subsidies

An update to my article about MinnesotaCare, Minnesota's public insurance program that in 2015 was converted into a Basic Health Plan under the ACA, serving residents with incomes up to 200% of the Federal Poverty Level:

On Friday, the state's Health Care Financing Task Force did vote (as my prior piece anticipated) to recommend extending MinnesotaCare eligibility up to 275% FPL -- which had been the eligibility cutoff before the ACA. That would take care most of those who would otherwise be eligible for subsidized private plans under the ACA.. The task force split along partisan lines, however, with no Republicans voting for the change, which would entail applying to HHS for an "innovation waiver" to alter the ACA subsidy structure (MinnesotaCare would be the only option for insurance seekers up to 275% FPL, as it now is for those with incomes up to 200% FPL).

As Republicans control the state's House of Representatives, the change is unlikely to happen this year. Republicans would go the other way and replace MinnesotaCare with subsidized private plans.  One option before the task force was to sweeten the ACA's private plan subsidies for those in the 200-275% FPL range to a level comparable to what MinnesotaCare would offer. That would cost the state considerably more than extending MinnesotaCare to 275% FPL. I don't know whether Republicans on the task force endorsed the sweetened-subsidy option or just want to go with an unvarnished ACA subsidy structure.

What about a state-level public option (with a remixed subsidy schedule?)

ACA marketplace plans work reasonably well for a majority of subsidy-eligible buyers -- but leave far too many underinsured, or paying premiums they can't readily afford. There's virtually a progressive consensus on that point by now.

The latest crystallization of this consensus is in an analysis of ACA plan holders' costs by the Urban Institute's* Linda Blumberg, John Holahan and Matthew Buettgens, which spotlights high combined premium and out-of-pocket costs for the sickest, oldest and wealthiest of subsidized plan holders in the ACA marketplace (as well as for those a notch above subsidy eligibility).

Among the subsidy-eligible, median costs are most acute for buyers with incomes over 200% of the Federal Poverty Level (FPL), the threshold at which strong Cost Sharing Reduction (CSR) subsidies phase out while subsidized premiums as a percentage of income rise. Median combined premium and out-of-pocket costs for marketplace customers with incomes ranging from 200-500% FPL range from 10,8% to 13.4%, according to the study authors. The spike in costs at the 200% FPL threshold is reflected in ACA takeup rates, which  according to a cited study,** fall off a cliff at 200% FPL, from 62% of eligible individuals to 29%.

The authors recommend, as Blumberg and Holahan have previously, that ACA subsidies be enriched across the board, and that tax credits be added above the current 400% FPL cap. While the cost would be relatively modest -- covered, in fact, by reduced spending projections for the ACA and Medicare-- the political lift is plainly impossible for the foreseeable future.

There may, however, be revenue-neutral steps that would boost affordability and so, takeup. If so, they will have to be taken at the state level. That's not only because Congress is incapable of constructive action where the ACA is concerned. It's also because the ACA benefit structure militates against any realized cost savings being passed directly to the consumer.

New York to make health insurance *really* affordable for low-income residents

Very quickly, as I'm leaving the house in 40 minutes, big news (via Charles Gaba, natch)  from New York: it's becoming the second state to offer a Basic Health Plan (BHP) for lower-income insurance seekers, as enabled by the Affordable Care Act. A BHP is a low-cost, low-premium offering for buyers with incomes between the Medicaid eligibility cutoff (100% or 138% of the Federal Poverty Level*) and 200% FPL.   The premiums and cost-sharing compare very favorably with the mainstream private health plans offered on ACA exchanges as previously priced for low-income buyers. New York's BHP will have two tiers, with virtually no cost for plan holders with incomes between 100% and  150% FPL and just a $20 monthly premium and minimal cost-sharing for buyers in the 150-200% FPL range.

The 100% FPL starting point presumably means that the upper end prior Medicaid-eligibles (100-138% FPL) will be transitioned in. The benefit summary is below the jump. The plans will be available in 2016; enrollment will begin in November. The state will contract with private insurers to deliver the benefits.

While this is excellent news for New Yorkers with incomes under 200% FPL, it may raise challenges for the private insurance market in New York. In 2014, 53% of private health plan buyers had incomes under 200% FPL, so the market is being sliced more than in half. Minnesota, which has had a low-cost option for residents under 200% FPL since the launch of the ACA markets (and in somewhat similar form, before the launch), has struggled to meet enrollments targets. Enrollments are currently just under 62,000; the state is now aiming for 95,000 private plan enrollments by the end of next year, versus early projections at least twice as high.. The state's lowest-cost insurer in 2014 exited the market this year.

Misrepresentation of the ACA in the Supreme Court: a postscript

In April and May,  during the countdown to the Supreme Court decision on the constitutionality of the Affordable Care Act, I did everything I could to highlight the material misrepresentation of the individual mandate in oral argument by Michael Carvin, counsel to the law's opponents.  To serve his argument that the ACA forces young and healthy individuals to buy insurance far in excess of their needs, Carvin  asserted, "Congress prohibits anyone over 30 from buying any kind of catastrophic health insurance" (p. 105). That was wrong on two counts: 1) the ACA allows not only adults under 30, but older adults who can show financial hardship, to buy bare-bones catastrophic coverage offered outside the ACA's insurance exchanges; and 2) the cheapest plans on offer in the exchanges provide coverage of an actuarial value low enough to be considered "catastrophic coverage" by most experts, including the Kaiser Family Foundation.


Via Don Taylor, I learned just last week that the plaintiffs' broader claim that the ACA forced people to buy insurance in excess of their needs was misleading on yet another count. The ACA contains a little-known option for states that want to provide affordable to those ineligible for Medicaid yet poor enough that the cheapest option within the insurance exchanges may prove a financial hardship. States may opt to establish a federally-funded Basic Health Plan (BHP). A March 2011 McKinsey report summarizes: