July | August 2017







States Watch Federal Health Care Action
but Move On

By Debra Miller, CSG director of health policy
Earlier this summer, state policymakers closely watched as Congress considered five measures—and adopted one—to fulfill campaign promises to repeal and replace the Affordable Care Act. The House adopted a bill on May 4, but the Senate failed to pass a bill. At this time, future Congressional action is uncertain.
State leaders, including a number of governors, expressed concerns about how the legislation adopted by the House, and those considered by the Senate, went beyond ACA provisions and would reduce federal Medicaid funding to states by a minimum of $756 billion and maximum of $842 billion between 2017 and 2026, according to the Congressional Budget Office, or CBO, analyses. Each bill’s changes to Medicaid funding reached beyond curtailing the state option to expand Medicaid eligibility and included replacing the current federal matching formula with block grants or per capita caps, each intended to reduce federal Medicaid funds received by states.
CBO also projected the numbers of uninsured Americans would increase by at least 22 million and as many as 32 million under the repeal without replacement reform version.  
Just days after the House bill’s passage, Ohio Gov. John Kasich called the bill “inadequate” on CNN’s “State of the Union” program. He said one-third of the 700,000 Medicaid enrollees in his state have mental illness or drug addictions and a quarter have chronic diseases and these people would be hurt by the bill.
"I think the fundamental issue here are the resources," Kasich said on the program. "I don't want to give you exactly the numbers, but it's about half the resources in this bill that were in Obamacare. Now, I can tell you we can do with less resources, but you can't do it overnight and you can't give people a $3,000 or $4,000 health insurance policy. You know where they're going to be? They're going to be living in the emergency rooms again."
Nevada Gov. Brian Sandoval also opposed the changes and signed on to a letter with Kasich and five other governors expressing their opposition to the bill. He underlined his opposition at a Las Vegas event in July.
“I’m going to fight to continue to keep the care that we have. It’s very personal for me because I’ve seen what it’s done,” the Nevada Independent reported that Sandoval said at a Las Vegas event in July.
The deep concern of state leaders over the possibilities of significant losses of federal Medicaid funding were illustrated at the recent CSG-West annual meeting in Tacoma, Washington. Nevada Medicaid Director Marta Jensen was questioned about how federal proposals to overhaul Medicaid would impact her state community paramedics program. She said Nevada was closely following the federal debate and preparing a series of contingency plans.
The political intrigue surrounding the ACA in Washington, D.C., has also created uncertainty in the individual insurance markets in the states.
Nevada has particularly felt the effects of this. Nevada state Rep. James Oscarson told the CSG-West Health Committee at its annual meeting that health care is as critical an issue as any faced by the nation.
“It’s really a people issue,” he said.
In his home state of Nevada, until just last week, no insurance company was planning to offer plans on the ACA exchange in 14 counties. Oscarson’s rural county of Nye was the exception. On Aug. 15, Sandoval announced that all of Nevada’s counties will have at least one insurance option on the state’s health insurance exchange in 2018.
Insurance-bare counties in Nevada, Ohio and Wisconsin have picked up coverage, leaving just one county in rural western Ohio without ACA coverage in 2018, according to the Kaiser Family Foundation.  
Premium prices for 2018 individual coverage sold on the ACA health insurance marketplace are still very much in play in the states.
“States are in a crunch. It is down to the last number of days,” Emily Curran, research fellow at Georgetown University’s Center on Health Insurance Reforms, told CSG. The center, or CHIR, expects that rates will increase from 2017.
Curran said that since February, insurers have warned that they would reduce their participation in the marketplaces and request rate increases if they were not assured that the ACA individual mandate would be enforced and that the cost-sharing reductions, or CSRs, paid to insurance companies to offset lower out-of-pocket payments from low-income exchange customers, would continue.
The uncertainty around these two questions has led insurers to submit two sets of premiums to state insurance regulators. Curran said that in general the prices are 20 percent higher if CSRs are not guaranteed to continue.
The Trump administration pushed the deadline for premium submissions to Sept. 5, leaving Congress little time to act. In California, the state-based exchange has delayed the deadline to Sept. 31, hoping for Congressional action, Curran said.
Even with the importance of federal action to stabilize the insurance exchanges, Curran said there are several things that states can do.
“This will be the year for marketing and enrollment outreach.”
Curran explained that the open enrollment period has been cut to six weeks so consumers have half the time to shop. In the state-based exchange states time has been added to the federally mandated timeframe. Resources are also available from some states. California increased it marketing budget by $5 million, for a total of $11 million, to provide additional outreach and help to consumers.
States also could provide reinsurance funds as Alaska and Minnesota have done. Reinsurance funds offset the costs for high-price insurance enrollees rather than absorbing them into the risk pool and raising all enrollees’ premiums.
In Alaska’s program, approved as a Section 1332 Medicaid waiver by the federal government, the state reinsures insurers for individuals with one or more of 33 high-cost conditions. Insurers return to the state reinsurance program both premiums received for individuals with these conditions and claims they would have paid had the individuals remained enrolled with the insurer. Alaska spent $55 million on the program in 2017. The sole insurer writing individual policies stayed in the market and the rise in premiums fell from an expected 42 percent to just 7 percent, according to a Health Affairs summary.
Health and Human Services expects the program to cost $59 million for 2018, of which the Centers for Medicare and Medicaid Services will provide $48.4 million on a quarterly basis and Alaska the rest.
Minnesota’s Health Insurance Premium Relief bill became law in January 2017 and appropriated $312 million to provide premium relief and stabilize premiums. The state’s 1332 Medicaid waiver, which would draw down federal matching Medicaid funds, is still pending.
States also can provide stronger incentives to keep insurers in the exchange marketplace or to attract new insurers, according to Curran. These incentives can include tax relief, regulatory relief and preferential treatment for Medicaid contracts.