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By Sara Hansard
Will states shortchange Medicaid to get spiraling individual health insurance premiums down?
That’s the fear some have as the Trump administration is expected to come out with guidance to make it easier for states to combine waivers to Medicaid rules with waivers from Obamacare.
At issue is whether states could use savings from changes to Medicaid programs to reduce premiums for Affordable Care Act health plans. With ACA premiums rising by double digits for the past two years and more areas with only one insurer, states are eyeing ways to reduce premiums to affordable levels for people who make too much money to get subsidies.
The super waivers are “something we’re looking at,” Wisconsin Deputy Insurance Commissioner J.P. Wieske told Bloomberg Law March 2.
Wisconsin Gov. Scott Walker (R) signed bipartisan legislation ( Senate Bill 770) Feb. 27 authorizing the state’s insurance commissioner to apply to the U.S. Department of Health and Human Services for a waiver under Section 1332 of the ACA to create a $200 million reinsurance program.
Under Section 1332, states can apply to make significant changes to ACA plans, as long as the coverage is at least as comprehensive and affordable as would be provided absent the waiver, a comparable number of residents of the state are covered, and the changes don’t increase the federal deficit.
In much of Wisconsin, there is now only one insurer in the individual market, Wieske said. Premiums rose 51 percent on average between 2017 and 2018, for the second-lowest cost silver tier plan for 21-year-olds. ACA premium subsidies for people earning 100 percent to 400 percent of the poverty level are based on the second-lowest cost silver tier plan.
In 2019, the first year of the proposed reinsurance program, claims between $50,000 and $250,000 would be partially covered for individual market insurers under the program. The federal government would provide $150 million of the funding and the state would pay the remaining $50 million. The program is expected to result in premium increases of 2 percent in 2019, instead of 15 percent, and the lower premiums would reduce the amount the federal government must pay for premium subsidies under the ACA, Wieske said.
The law also authorizes the Wisconsin insurance commissioner to look at “any other waiver that we think would help stabilize the market, lower costs, expand coverage,” Wieske said.
A rule issued in 2015 by the Obama administration required that savings from Medicaid waivers and ACA waivers be treated separately. “When you’re trying to coordinate between those markets, and you’re saving in one area and maybe it’s more expensive in another one, how do you balance that out?” Wieske said.
Hybrid health plans could allow better transitions between Medicaid and the private market as many low-income people experience eligibility changes, Wieske said.
“Our hope is that [the Centers for Medicare & Medicaid Services] will end up adding flexibility to this process to allow that to happen,” he said.
Wisconsin covers adults earning up to 100 percent of the poverty level in its Medicaid program, which is not part of the ACA’s Medicaid expansion, Wieske said.
“The states are trying to tie their commercial and Medicaid changes together to get more powerful flexibility for state-led health reform,” Yvonne Villante, director of marketing and health-care reform with Softheon Inc. in Stony Brook, N.Y., told Bloomberg Law March 2. Softheon is a software company that works with health insurers on exchanges and keeps a close eye on waivers and other health law regulations.
Currently states that want to make changes that affect commercial health insurance markets and Medicaid need to gain approval for both waivers, Villante said in an email.
Idaho appeared to be the closest to applying for a combination of changes to Medicaid and its individual market.
However, the plan by Republican Gov. Butch Otter to provide health care for some people living under the poverty line who don’t qualify for coverage under Medicaid or premium subsidies on the exchange has been sent back to a House committee in the overwhelmingly Republican Legislature where it will likely die.
The heart of Idaho’s plan was a pair of waivers. The first was a Section 1332 state innovation waiver that would allow some 35,000 people with incomes below 100 percent of the poverty line to qualify for premium subsidies on the exchange. The second was a Section 1115 Medicaid waiver that would allow somewhere between 2,500 and 3,500 sick people on the private insurance market with complex conditions to be moved to Medicaid in a plan that would act like a reinsurance program.
Otter’s Idaho Health Care Plan with its dual-waiver approach, along with the state’s decision announced in January to allow plans on the individual market that don’t comply with the ACA, has attracted a lot of attention in the Trump administration as potentially innovative solutions to addressing both escalating premiums and the uninsured gap population.
Otter and Idaho insurance department director Dean Cameron met in Washington on the weekend of Feb. 24 with HHS Secretary Alex Azar and CMS Administrator Seema Verma, who reportedly received the plan warmly.
The question is whether states would be using savings from financially stretched Medicaid programs to shore up the private insurance market.
“Medicaid is already about the lowest spending health program” on a per capita basis, Sara Rosenbaum, a professor of health law and policy at the George Washington University, told Bloomberg Law March 2.
“The notion that there is excess money that can be used in Medicaid to bring down private insurance rates is totally absurd,” Rosenbaum said.
“It defies logic that without doing terrible harm to Medicaid beneficiaries you could score savings that you could then turn around and use to bring down commercial insurance rates,” Rosenbaum said.
To contact the reporter on this story: Sara Hansard in Washington at email@example.com
To contact the editor responsible for this story: Kendra Casey Plank at firstname.lastname@example.org
Information on Wisconsin Senate Bill 770 is at https://oci.wi.gov/Pages/PressReleases/20180221PassageSB770.aspx.
Information on Section 1332 waivers is at http://src.bna.com/wMG.
Information on Wisconsin premiums is at https://oci.wi.gov/Pages/PressReleases/20171012OpenEnrollmentSLCSP.pdf.
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