Category Archives: Policy Updates

Top 10 Changes to Medicaid Under House Republicans’ ACA Repeal Bill from NHeLP

A big Thank You from NHeLP | National Health Law Program for making it clear what will change if the ACA is repealed.

On March 6, House Republicans introduced the American Health Care Act (AHCA) to repeal the ACA and eliminate the current financing structure of Medicaid. Yet the bill makes many other draconian changes to Medicaid. Overall, the Congressional Budget Office estimates that several major provisions affecting Medicaid would decrease direct spending by $880 billion over the 2017-2026 and result in 14 million individuals losing Medicaid. This fact sheet addresses how AHCA impacts Medicaid.

1. Implements a Per Capita Cap. Since 1965, Medicaid has operated as a federal-state partnership where states receive on average 63% of the costs of Medicaid from the federal government. The federal share is based on actual costs of providing services. AHCA limits the federal contribution, based on a state’s 2016 expenditures inflated at a rate that is projected to be less than the yearly growth of Medicaid health care costs.3 So starting January 1, 2020, funding for state Medicaid programs will shrink over time, resulting in states cutting coverage and services for all beneficiaries.4

2. Repeals Medicaid Expansion. AHCA effectively repeals the Medicaid expansion on January 1, 2020 by eliminating the enhanced federal funding for states to enroll non-pregnant childless adults. It also requires those in the Medicaid expansion population to submit eligibility renewal paperwork every six months just to stay on Medicaid, beginning October 1, 2017. Thus, states can continue to cover this group, but only at regular matching rates and, this, coupled with the stringent re-determination requirements for this group, will effectively repeal the coverage (CBO estimates only 5 percent will be left in this group by 2024). NHeLP issued a separate fact sheet on this issue.

3. Repeals Mandatory Medicaid Coverage for Children ages 6-18 over 100% FPL. The ACA requires states to provide Medicaid coverage to all children ages from birth to age 19 under 138% of the Federal Poverty Level (FPL). Prior to the ACA, states had to cover children ages 0-5 years old up to 133% FPL but states only had to cover children ages 6-19 (or up to 21 at state option) up to 100% FPL. AHCA lowers the eligibility level for children ages 6-19 from 133% FPL back to 100% FPL. This means that (in some states) children may lose their Medicaid and can only be enrolled in CHIP or be uninsured. These children may get fewer benefits than on Medicaid and may not receive all services they need to correct or ameliorate their medical or mental health conditions.

4. Repeals Presumptive Eligibility for the Medicaid Expansion Population and Repeals Hospital Presumptive Eligibility for Everyone. In addition to repealing the Medicaid expansion, AHCA prevents states from using “presumptive eligibility” for non-pregnant childless adults after January 1, 2020 even if a state chose to continue covering non-pregnant childless adults under its regular Medicaid funding. Further, AHCA repeals the ability of states to use Hospital Presumptive eligibility to enroll any individual in Medicaid.

5. Eliminates Retroactive Eligibility. Medicaid currently provides coverage up to three months before the month an individual applies for coverage. This “retroactive coverage” protects individuals from medical expenses they incurred before they apply for Medicaid. An individual may not be able to apply for Medicaid immediately due to hospitalization, a disability, or other circumstances and retroactive coverage provides that critical coverage and ensures providers can get reimbursed for their costs and low-income individuals do not end up facing severe medical debt or bankruptcy due to these medical expenses. AHCA repeals this coverage for all Medicaid beneficiaries starting October 1, 2017.

6. Imposes Stricter Citizenship Verification Requirements. Currently Medicaid applicants must provide documentation of their citizenship or nationality to enroll in Medicaid, but can access health care services while waiting for verification. Beginning 6 months after this bill is enacted, AHCA would prevent states from obtaining reimbursement for any services received while an individual is obtaining the necessary documentation (called a “reasonable opportunity period”) even if the individual meets all other Medicaid eligibility requirements and attests to his or her citizenship status. It is likely that states will also elect to delay eligibility until after documentation is verified so they do not have to pay 100% of the costs during the reasonable opportunity period.

7. Imposes New Financial Limits on Medicaid Waivers. States may seek waivers from the federal government allowing the state to stop having to follow certain federal Medicaid requirements so the state can test experimental, pilot, or demonstration projects that promote the objectives of the Medicaid program. Normally, states would have to ensure this would be “budget neutral” to the federal government over the course of the waiver period (typically five years), thus, can spend more federal funds up front to build new infrastructure or provide more intensive services. AHCA takes away states’ flexibility to spend these waiver funds up front by imposing yearly budget caps.

8. Repeals Essential Health Benefits (EHBs) for Medicaid Expansion Beneficiaries. Under the ACA, states that expanded coverage to non-pregnant childless adults had to provide coverage in at least the 10 “essential health benefit” categories. AHCA repeals this requirement, which will no longer apply after December 31, 2019, resulting in beneficiaries losing services such as mental health and substance use disorder services, and losing access to some free preventive health services.

9. Repeals Enhanced Funding for States for Community First Choice (CFC) Attendant Supports. Established under the ACA, the “Community First Choice Option” allows States to provide home and community-based attendant services and supports to eligible Medicaid enrollees under their State Medicaid Plan. CFC funds assist individuals with Activities of Daily Living (ADLs), habilitative services and emergency back-up systems like electronic indicators. CFC also gives states the option to cover many of the costs of transitioning individuals from institutional care to supported community living, including rent deposits, moving expenses and some nonmedical transportation. Some of these services compliment the transition services. AHCA repeals the 6% increase in funds established to cover these services starting January 1, 2020.

10. Limits Home Equity Exclusions. Currently, individuals needing nursing home or other long-term care services must have home equity below a certain limit to qualify for those Medicaid services. States can exclude up to $750,000 of these individuals’ home equity. AHCA prohibits states from exceeding $500,000 of home equity, starting 6 months after the bill is enacted into law, potentially limiting the availability of nursing home and other long term care services to individuals who may live in high-cost areas and have substantial home equity but limited income and other assets.

Changing the financing of Medicaid from a guarantee (or “entitlement”) to a per capita cap and these other changes to Medicaid threaten everyone — enrollees who receive services, health care providers who provide care through Medicaid, families who live and work without the worry of providing expensive care to a child with a debilitating illness or an older adult who needs home care or nursing home care, and all communities which benefit from the jobs created and the federal dollars flowing into our state economies. Cutting $880 billion in federal funding and 14 million individuals off Medicaid creates significant financial hardship for states and is devastating for low-income and vulnerable people everywhere. No one can afford these changes.

What the CBO Score means for Colorado

This is a reprint published by The Colorado Center on Law and Policy (CCLP).  CCLP is a nonprofit, non-partisan research and advocacy organization that engages in legislative, administrative and legal advocacy on behalf of low-income Coloradans.

Yesterday, the Congressional Budget Office and the staff of the Joint Committee on Taxation estimated that the House Republicans’ American Health Care Act would increase the number of uninsured Americans by 24 million over the next 10 years, result in big reductions in assistance for lower-income consumers who purchase insurance on the state exchange, and lead to a precipitous 25 percent drop in federal funding for Medicaid over 10 years. Read this analysis from CCLP’s Bethany Pray and this fact sheet for more details.
The short-term changes from theAct would be significant. With 14 million Americans projected to be uninsured just one year from now, approximately 238,000 more Coloradans could lose or forgo coverage. The repeal of the mandate to purchase insurance would be one factor in people’s decision-making. Those most likely to drop coverage would be younger Coloradans, while those with greater health needs would have reason to stay in. When carriers have to pay more for a typical enrollee, they raise premiums. That shift in the health status of those who are covered is projected to increase premium rates in 2018 and 2019 by 15 to 20 percent. These and successive drops in coverage will return Colorado to a scenario where hospitals must cover increasing amounts of uncompensated care, and that drives up costs for everyone.

You can learn more through the Protect Our Care Colorado website.

Washington DC Update (2/22/17)

If you want to read the full newsletter or past issues please click here …  Washington DC Update Past Issues.

THE ADMINISTRATION

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.

IN CONGRESS

Nominations

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.