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Trump can still shrink Medicaid

By PHIL GALEWITZ

For Kaiser Health News

After the Senate fell short in its effort to repeal the Affordable Care Act, the Trump administration is poised to use its regulatory powers to accomplish what lawmakers could not: shrink Medicaid.

President Trump’s top health officials could engineer lower enrollment in the state-federal health insurance program by approving applications from several GOP-controlled states eager to control fast-rising Medicaid budgets.

Indiana, Arkansas, Kentucky, Arizona and Wisconsin are seeking the administration’s permission to require adult enrollees to work, submit to drug testing and demand that some of their poorest recipients pay monthly premiums or get barred from the program.

Maine plans to apply Tuesday. Other states would likely follow if the first ones get the go-ahead.

Josh Archambault, senior fellow for the conservative Foundation for Government Accountability, said absent congressional action on the health bill “the administration may be even more proactive in engaging with states on waivers outside of those that are already planning to do so.”

The hope, he added, is that fewer individuals will be on the program as states figure out ways “to transition able-bodied enrollees into new jobs, or higher-paying jobs.” States need to shore up the program to be able to keep meeting demands for the “truly needy,” such as children and the disabled, he added.

To Medicaid’s staunchest supporters and most vocal critics alike, the waiver requests are a way to rein in the $500 billion program that has undergone unprecedented growth the past four years and now covers 75 million people.

Waivers have often been granted in the past to broaden coverage and test new ways to deliver Medicaid care, such as through private managed-care organizations.

But critics of the new requests, which could be approved within weeks, said they could hurt those who are most in need.

The National Health Law Program “is assessing the legality of work requirements and drug testing and all avenues for challenging them, including litigation,” said Jane Perkins, the group’s legal director.

The administration has already said it favors work requirements and in March invited states to suggest new ideas.

Before taking the top job at the Centers for Medicare & Medicaid Services, Seema Verma was the architect of a Kentucky waiver request submitted last year.

Not all states are expected to seek waivers, because Medicaid enjoys wide political support in many states, particularly in the Northeast and West.

Medicaid, the nation’s largest health insurance program, has seen enrollment soar by 17 million since 2014, when Obamacare gave states more federal funding to expand coverage for adults. It’s typically states’ second-largest expense after education.

This year, Senate and House bills tried to cap federal funding to states for the first time. Since the program began in 1965, federal Medicaid funding to states has been open-ended.

Health experts say allowing the waiver requests goes beyond the executive branch’s authority to change the program without approval from Congress.

“The point of these waivers is not for states to remake the program whole-cloth on a large-scale basis,” said Sara Rosenbaum, a health-policy expert at George Washington University who chairs a Medicaid group that advises Congress.

Rosenbaum noted that states received waivers for different purposes under the Obama administration.

In Iowa, state officials won the authority to limit non-emergency transportation. Indiana received approval to charge premiums and lock out enrollees with incomes above the federal poverty level if they fell behind on paying premiums.

“Now there is concern these more extreme measures would hurt enrollees’ access to care,” Rosenbaum said.

Three states seeking waivers today are home to three key GOP players in the Senate health debate: Majority Leader Mitch McConnell (Kentucky), Sen. John McCain (Arizona) and Vice President Mike Pence (Indiana).

If states add premiums, as well as work and drug testing requirements, the result would be fewer people enrolling and staying in Medicaid, said David Machledt, senior policy analyst for the National Health Law Program.

“How does that serve the purpose of the Medicaid program and what are the limits of CMS waiver authority?” he asked.


The GOP’s ‘individual mandate’

By MICHELLE ANDREWS

For Kaiser Health News

The Affordable Care Act’s requirement that people have health insurance or pay a fine is one of the least popular provisions of the law, and one that Republicans have pledged to eliminate when they repeal and replace Obamacare. But take a look at some of the conservative replacement proposals that are floating around and it becomes clear that the “individual mandate,” as it’s called, could still exist, but in another guise.

The health law’s mandate doesn’t actually require people to have insurance. Instead, it imposes a tax penalty on most people if they don’t have coverage. In 2016, the penalty is the greater of $695 per person or 2.5 percent of household income.

That unpopular tax penalty is what makes possible the very popular provision of the law that prohibits insurers from turning people down for coverage because they have preexisting medical conditions that might make them expensive to insure. The mandate is designed to make sure  that healthy people buy coverage so that insurers are not left with an expensive risk pool full of people who are sick.

President-elect  Trump has signaled that he would like to find a way to keep the ban on preexisting conditions. But requiring insurers to accept all comers means that they need some mechanism to coax people into buying and keeping insurance before they develop expensive conditions like diabetes or cancer. In other words, they need a mandate.

Health-policy wonks point out that the individual mandate was originally a Republican idea, advocated by academics and conservative thinkers as a way to avoid a government-run single-payer system. “The purpose of it was to round up the stragglers who wouldn’t be brought in by subsidies,” Mark Pauly, a University of Pennsylvania economist, said in a 2011 interview. He co-authored a Health Affairs study in 1991 that aimed to persuade then-President George H.W. Bush to adopt a universal healthcare requirement.

The drafters of Obamacare incorporated the individual mandate concept because they hoped to get Republicans on board, said Sara Rosenbaum, a professor of health law and policy at George Washington University in Washington, D.C.

Republicans generally accept that some sort of incentive is necessary to help stabilize the insurance market in whatever system they propose as an alternative to the health law. In a policy paper released last summer, House Speaker Paul Ryan proposed creating a one-time open enrollment period during which people could sign up for coverage regardless of their health. As long they stay enrolled in coverage in the individual or group market, they wouldn’t be charged higher rates if they get sick. If they don’t sign up during that open enrollment period, though, those protections don’t apply, and people could face higher premiums and healthcare costs if they were to buy insurance.

“It’s a soft mandate,” said Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank. “You must get in now to get this treatment.”

But health-policy analysts say that a one-time open enrollment period, whether it’s one month or three months in length, isn’t enough.

“Such stringent limits on open enrollment ignore the complexities of individuals’ lives,” said Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center. People lose their jobs, get into car accidents, and they may not understand the implications of dropping coverage for a period of time. “The penalty on these folks would potentially be enormous,” she said.

Another option to nudge people to get insurance is to impose a penalty on the premium price if they don’t sign up at a designated time, for example, when they turn 26 and no longer qualify for their parents’ coverage. This option would be similar to the rules for Medicare Parts B and D that cover outpatient services and prescription drugs, respectively. People who don’t sign up for Medicare Part B when they’re first eligible, for example, are charged an additional 10 percent of the premium for every year that they could have enrolled but didn’t.

But Medicare is different in important ways from the individual insurance market, said Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms. When people sign up for Medicare, they’re generally enrolling for the rest of their lives. In contrast, people may move in and out of the individual market a number of times over their lives as they change jobs or leave the Medicaid program, for example.

“It’s much more difficult to determine what their first opportunity to sign up was,” Corlette said.

There are ways to get people to sign up using a carrot rather than a stick, including increasing the subsidies people receive for coverage, said Corlette.

But Trump has not yet signaled much about his replacement plan, including the extent to which subsidies or other financial assistance would be available under a new health care program.


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