Washington DC Update (2/22/17)

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Rule on Insurance Stabilization Payments and Essential Benefits

Last week the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule, summarized in a CMS press release, to make changes intended to stabilize the individual and small group insurance markets. The proposed rule would amend standards relating to special enrollment periods, guaranteed availability, network adequacy, essential community providers, and actuarial value requirements. It also proposes to shorten the annual open enrollment period in the individual market for the 2018 plan year to about six weeks. According to an article in Axios the proposed rule seems to be viewed favorably by insurance companies, but not by some health-consumer advocates, as exemplified in a recent Families USA blog post. Comments on the proposed rule are due by 5:00 pm ET on March 7, 2017.

IRS Rule on Reporting about Insurance Coverage

As explained in a blog post from Reason, the IRS quietly made a decision to stop requiring people to fill out the line on the 1040 tax form that indicates whether the tax filer had health coverage during the tax year. This is a way of not enforcing the ACA’s “individual mandate.” See Trump’s IRS stages a stealth attack on Obamacare.

IDEA Website

As explained in an article from the Washington Post, disability and education advocates expressed concern about the disappearance of the part of the US Department of Education website (http://idea.ed.gov/) which provided information about the Individuals with Disabilities Education Act (IDEA). That website is now up again, but refers the user to a more updated version, at https://www2.ed.gov/about/offices/list/osers/osep/osep-idea.html.



CMS Administrator. The president has nominated Medicaid consultant Seema Verma to head the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, Medicaid, and the ACA. The Senate Finance Committee held her confirmation hearing on February 16. The most notable moment of the hearing was when Ms. Verma indicated that she thinks women should be able to purchase insurance plans that do not include maternity benefits. She also indicated that she does not support proposals to create Medicare vouchers, but does support per capita caps or block grants for Medicaid. Other topics addressed are reported in an article from USA Today. The committee accepts public comments on the nomination, due no later than March 2.

ACA Repeal and Medicaid Restructuring

On February 16, the House Republican leaders released a “policy brief” outlining their plan to repeal and replace the Affordable Care Act (ACA) AND drastically restructure the Medicaid program. (The ACA proposal starts on page 10 Medicaid proposal starts on page 14.) The document is very general, so it is difficult to assess how it would affect the access to affordable insurance.

ACA Replacement. This ACA replacement plan would: eliminate the penalty for failure to have health insurance coverage (individual mandate) and the employer mandate, provide refundable age-based (not income-based) tax credits for the purchase of insurance plans, including catastrophic plans, “enhance and expand” Health Savings Accounts, allow the sale of insurance across state lines, and provide “State Innovation Grants,” which states could use to make health care or insurance more affordable, including the creation of high-risk pools.

Notably, the policy brief does not mention how the plan might protect individuals with pre-existing conditions. But last week Rep. Greg Walden (R-OR), the Chairman of the House Energy and Commerce Committee, which has jurisdiction over Medicaid and many other health care issues, introduced the Pre-Existing Conditions Protection Act of 2017, which purportedly would prohibit group health-plan issuers from using an individual’s pre-existing conditions to determine eligibility for coverage, the services covered, or individuals’ premiums. But, as drafted, the bill does not seem to limit the premiums that can be charged for people buying insurance in the individual market.

It is difficult to assess the Ryan plan without knowing critical details, although, based on past experience, there are reasons to think that Health Savings Accounts, interstate insurance sales, and high-risk pools may not be effective in expanding coverage. House Speaker Paul Ryan said a bill would be released and committees would start to consider the legislation during the week of February 27, although it is quiet possible that date will slip.

Medicaid. The plan would cut federal Medicaid spending by imposing “per capita caps” on federal Medicaid payments to states. In other words, a state would receive a fixed amount per enrollee, varying by type of enrollee – “aged, blind and disabled, children, and adults.” States would have the option of taking a block grant instead, meaning they would get a fixed amount regardless of their population of Medicaid enrollees. Under either system, the starting amount each state would get (baseline) would be based on that state’s historical Medicaid payments, with some sort of annual inflation adjustment. This raises the politically thorny issue of how to treat the difference in historical payments between the states that took up the ACA Medicaid expansion option and those that did not. Under the plan outlined in the policy brief, the former group would eventually lose their enhanced matching payments for the expansion population, while the non-expansion States would be eligible to receive “additional temporary resources for safety net providers” during a transition period.

The key point is that federal payments to states would be increasingly lower than they would under current law. In exchange for receiving less federal money, states would be given more flexibility in designing their Medicaid programs – in services and supports covered, and/or in populations served. (In the paragraph on block grants, however, the brief says that states “would be required to provide required services to the most vulnerable elderly and disabled individuals who are mandatory populations under current law.”) See 5 Key Questions: Medicaid Block Grants & Per Capita Caps (Kaiser Family Foundation). The Center for Law and Social Policy has prepared a brief on how block grants have worked (or not) in other programs.

Prospects. Many House Republicans are not ready to commit to the ACA-replacement outline released by Speaker Ryan. Furthermore, it is not clear how much support there would be for this plan in the Senate, particularly for Medicaid restructuring. Additionally, some governors will be opposed to capping Medicaid payments, since states stand to lose billions of federal dollars over time. Moreover, there will be a “formula fight” (a.k.a., “food fight”) among governors over how to treat Medicaid expansion funding in determining the baseline for future federal payments.

A new tool from the Kaiser Family Foundation allows users to compare some of the different proposals to replace the ACA.

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