Enrollment in Medicaid surges in Minnesota

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An Urban Institute analysis released this week, How the COVID-19 Recession Could Affect Health Insurance Coverage, estimates, in the more conservative of two models deployed, that if the unemployment rate reaches 15%, Medicaid enrollment will increase by 8.2 million  nationally. That would constitute a 16% increase in total Medicaid enrollment for the under-65 population.

Minnesota appears to be halfway there already. The state tracks enrollment in managed* Medicaid and MinnesotaCare, a Basic Health Program that provides Medicaid-like coverage to people in households with income up to 200% of the Federal Poverty Level, on a monthly basis.

From February to May this year, managed Medicaid enrollment in Minnesota for adults age 21-64 is up 10.4%. For pregnant women, it's up 16%. Enrollment of children is up 6%. Enrollment in MinnesotaCare, the BHP, is up 24% -- though enrollment in that particular program was up almost as much in Feb-May 2019.

In total, managed Medicaid/MinnesotaCare enrollment has increased by 77,142 (8%) since February, more than five times last's year's increase in the same period of 14,547 (2%).  Since mid-March, 590,000 Minnesotans have applied for unemployment benefits, according to the state Management and Budget office's May budget projection.

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

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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.

A hole in the heart of Medicaid/Medicare buy-in plans

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A catch-22 bedevils Medicaid or Medicare buy-in plans designed to co-exist with the ACA marketplace, whether on the state or national level.

On one hand: If the public option is integrated into the marketplace and conforms to ACA benefit and subsidy levels, it won't help subsidized buyers much. They will still pay the same premium for the same level of benchmark plan benefits. The affordability of their options besides the benchmark plan depends on price spreads -- how much less or more other options cost compared to the benchmark. It's highly unpredictable how a public option will affect those spreads -- unless the silver public option plan is the cheapest in that market and way cheaper than the benchmark.

A public option may help unsubsidized buyers by providing a low-overhead choice and possibly stimulating lower unsubsidized premiums across the board. That helps the federal treasury too. But it may compress premium spreads and so make subsidized buyers' choices worse. The problem for subsidized buyers (over 85% of enrollees on ACA exchanges and over 60% of enrollees in ACA-compliant plans) is that the marketplace is under-subsidized. Premiums and out-of-pocket costs are just too high at income levels above 150% FPL.

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.

Can Hillary Clinton strengthen the ACA without legislation?

Jonathan Cohn has a post urging Bernie Sanders to use his enhanced visibility in the Senate to push for incremental moves toward his long-term goal of a single-payer healthcare system. Shorter term goals within the realm of imagination include letting CMS negotiate drug prices (and, I would add, leave some drugs off the formulary); gradually opening Medicare to people under 65 (perhaps starting with a buy-in option at age 60); and pushing for the widely popular "public option" that didn't make it into the ACA.

So much for Bernie in the Senate. What about Hillary in the White House? Let's be optimistic for a few minutes and assume she gets there. What can she really do to improve healthcare access and affordability?

We don't have to speculate wildly. In typical Hillary Clinton fashion, she has posted a raft of proposals to supplement and strengthen the Affordable Care Act and rein healthcare cost growth. They're lightly sketched in, though, and it's hard to know where Clinton would place her emphasis

One obvious starting point is with those that can be effected by executive action and administrative focus rather than by legislation. Steps requiring legislation are for the most part unlikely to happen, except in the unlikely event that a Democratic blowout takes back the House as well as the Senate -- and legislative possibilities would probably be quite limited even with a narrow Democratic majority.

Proposed in Minnesota, an industrial-strength public option

Minnesota progressives and elected officials in the state's Democratic Farmer-Labor party (DFL) are yearning to get back to the future with MinnesotaCare, the state's excellent public insurance program for residents of low-to-moderate income who earn too much to qualify for Medicaid.

Prior to ACA implementation, MinnesotaCare was available to Minnesotans with incomes up to 275% of the Federal Poverty Level. In 2015, the plan was converted under the ACA into a Basic Health Plan, which qualified it for federal funding but cut off eligibility at 200% FPL. Former enrollees above that income level were sent to the ACA marketplace, where both premiums  and out-of-pocket costs are considerably higher.

A task force appointed by the governor recommended in mid-January that the state seek an ACA innovation waiver to restore MinnesotaCare eligibility to 275% FPL, with funding equivalent to the cost of federal marketplace subsidies for enrollees up to that income threshold. I wrote about that plan and its implications on healthinsurance.org in January. Its impact on the private plan marketplace and larger individual market would be fairly modest -- just 37,000 enrollees in the 200-275% FPL range are forecast -- but it would provide high actuarial value coverage to the majority of those who would otherwise be eligible for subsidies in the ACA marketplace if MinnesotaCare did not exist.

Last month, a more radical proposal was introduced in legislation in the Minnesota State Senate. I have a piece up about this proposal today on healthinsurance.org. It would offer MinnesotaCare at only modestly reduced actuarial value (if reduced at all) to anyone who wanted to buy in. While costs have not yet been closely calculated, the hope is that the premium would be in silver plan range:

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.

A More Affordable Care Act? Some states may make it so

I have a post up on healthinsurance.org about current and possible future state initiatives to sweeten the benefit pot (though it doesn't address the subsidy bump-ups provided by Massachusetts and Vermont).  Here's the first section:

Remember the public option? It was a linchpin of early Democratic health reform blueprints for what became the Affordable Care Act. The health insurance marketplace would be anchored by a government-run health plan that would work to keep costs low and make coverage as comprehensive as possible. Private insurers in the marketplace would have to compete against it.

The insurance industry lobbied hard against the public option, and the most conservative Democratic senators killed it. (Every Democratic vote was needed to pass the law, because Republicans rejected it en masse.)

When the ACA passed without a public option in 2010, some observers speculated that Congress might come back to establish one at a later point, if competition among private insurers proved a force too weak to keep coverage affordable. But that is clearly not going to happen on a national level with Republicans in control of Congress.

There is one way a public option could become a reality in fairly short order, however. The ACA didn’t create one market for health insurance, but rather 51 markets – one for each state plus the District of Columbia. And states have considerable freedom to shape their insurance markets, should they wish to seize it. “Nothing in the ACA stands in the way of a state creating a public option,” notes Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation.

Minnesota's "public option"

Ever since I read in fall 2013 that ACA bronze plan deductibles average over $5,000 per person, I have been concerned about the availability of such essentially catastrophic coverage at tempting low premium prices to low income ACA buyers -- who we now know are the vast majority of ACA private plan buyers (83% of buyers on healthcare.gov have household incomes under 250% of the Federal Poverty Level).

Hence my preoccupation with Cost Sharing Reduction subsidies, available only with silver-level plans, which reduce out-of-pocket costs to less prohibitive levels.  A silver plan has an actuarial value of 94% for buyers under 150% FPL and 87% for those at 200-250% FPL. But silver plans are expensive for low income people. The benchmark second-cheapest silver plan costs 4% of income for buyers with incomes in the  138-150% FPL range and about  6% for buyers with incomes at 150-200% FPL. That's a lot --  $118 per month for a single person earning $23,000. And  a plan at that price may still carry a per-person deductible as high as $1,500 for those in the 150-200% FPL range.

The ACA allows for a more truly affordable option, but only one state has taken it -- in fact, has long had it. That's Minnesota, which since 1992 has had a program similar to Medicaid, MinnesotaCare, serving residents with incomes up to 200% FPL.  As of Jan. 1, 2015, MinnesotaCare was approved as a Basic Health Plan (BHP) under the ACA -- that is, a state-run plan serving residents with incomes between 138%  and 200% FPL (those below 138% qualify for Medicaid, known in Minnesota as Medical Assistance). Under ACA rules, the federal government pays 95 percent of the ACA subsidies to which enrollees in the plan would have been entitled if they enrolled in private QHPs.