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notes drafted by Sen. Ed Buttrey
Efforts to reform healthcare in Montana continue, with the work of many legislators and the governor’s office, well beyond the 2013 Session or even the failing of the Medicaid Expansion ballot initiative. Various groups are providing input including state healthcare organizations for hospitals, doctors, and insurers. This work is also being informed by work done by other states who are further down the road in regards to this effort.
This article summarizes information received from Senator Jonathan Dismang (R-Senate Whip, will be upcoming Pro-Tempore), Mr. Andrew Allison (R-State Medicaid Director), and Mr. John Selig (Director HHS).
The bill’s lead sponsor, Senator Dismang (who, by the way was offered in the past the job of State Director for Americans for Prosperity), started out the process in leading a group of Republicans with gathering data about the ACA (ObamaCare) in an effort to be prepared to lead an effort to kill any efforts to incorporate expansion in Arkansas. Making a long story short, the education they received (each of their group read and intimately understands the Federal law) caused them to understand that positives of parts of the law and the opportunity that they could have in implementing (through waivers) a system that was affordable, sustainable and would help their working poor population. Arkansas is a very poor state (49th in the nation, according to the group). While their views did change while doing the research, they held firm to their beliefs that Medicaid could not be expanded, that the Medicaid system should only exist to assist those for which is was originally intended (blind, disabled, children, elderly).
The Arkansas delegation gave us the following statements and data:
- The system to date seems to be working well in Arkansas, and the population is happy.
- Doctors rates are lowering, specialist rates are already down 15%.
- Hospitals have seen a 30% decline in uncompensated care in the first 4 months of the program.
- They have been assured by CMS that they can end the program when the waivers or law sunset or expire.
- Competition among insurers is up, there are more provider networks, and the cost of insurance is lowering.
- They can show sustainability and affordability of the system for at least 10-15years.
- Should the ACA be repealed/revised, they will already be ahead as they have new insurers in the marketplace, the population is getting healthier and the Medicaid roles are reducing.
- When asked how they could get this passed in a Republican legislature, the response was:
- Needed to separate rhetoric from fact when talking to Legislators
- Reform of entitlement programs was a must in negotiating with executive
- Needed to show sustainability and that this was long term a cost savings to State
To make a state plan work, they knew that they would need to reduce the size of the Medicaid population to cause the State to reap the savings of the reduction, which would help pay for any system moving forward. In Arkansas, a large expense with Medicaid was seen in a number of areas, including coverage for pregnant women, medically impoverished (poor unhealthy population that get unhealthier and end up in Medicaid), individuals that apply for and receive the status of disabled (to get on Medicaid, but can actually work), breast/cervical cancer patients, family planning, and TB patients. The group realized that if a private option was utilized for coverage in a new plan, there would be no need for these expenses in Medicaid (except for women that got pregnant prior to getting coverage in the private option) as the services needed by these folks is covered in the private market plans. These people would get on the private option, and with the plans that are offered in Arkansas with the option, would have no need to transition to Medicaid. In the case of the people that were moving to Medicaid by applying for disability (which means they can’t work to be approved) just to get insurance, they would already have coverage which then allows them to remain in the workforce. At this point in time, due to the plan they implemented (as of 1/1/2014), they have already seen a 15-20% reduction in their Medicaid population (over 115k people off the roles) and a large amount of subsequent savings to the state ($50M savings in the pregnancy coverage alone to the state) and annual saving total of $89M within Medicaid alone. With this type of option, they are also able to eliminate state specific programs, as in our case programs like InsureMt, adding more savings.
As their program was being incorporated, their estimates were that 160k people would qualify for the expansion, with 10% of those being identified as medically frail. This frail population would remain in a Medicaid bubble (most of them are already in Medicaid) which would keep them from the private insurance marketplace, thus keeping the private insurance as cheap as possible. Their population eligible (as is now found) is 60% women, 80% under 100% FPL wages (and did not already have insurance), and the average age being 39 years. The majority (nearly all) are working and healthy. The new insurance plans being offered in the Arkansas system are the exact same policies that are offered to the general public in the marketplace, so there is no specific program just for the new population. The addition of these quantities of young, healthy people acts to bring the cost of insurance to all parties (not just the expansion population) down (Goal 1). Interestingly, there is a ton of information being routed around stating that the cost of the plans is rising out of control and that their actuarial analysis of the costs of the insurance were way off base. The response from the Arkansas folks was that this is an outright lie. Their actuarial estimates showed that the average age of the new population would be 37, the actual age has been shown to be 39 which did add some minor costs to the insurance. Otherwise, they are finding the data to date to be right on with the estimates. Coupling this with the stated fact that the program is only 4 months old and that real overall cost data will not be available for another year, these statements being made are completely false. For now, the premiums estimated are spot on with the actual results. Another interesting point is that some of the insurers in the system are offering things like dental and vision as part of the plan, which is over and above the Federal requirements and add un-needed costs to the system. The Arkansas folks are fixing the plans moving forward which will further reduce the costs.
The plans that are currently offered are High Silver Tier plans. Basic silver plans in Arkansas are only covered about 75% with the Fed money, which leaves 25% of the costs to the individual, which is not allowed by ACA. ACA allows what are called High Silver Plans which also include cost sharing subsidies. In the Arkansas case, the new plans are covered 95% with the Fed money through premium and cost sharing subsidies (for the poorest people <100% FPL) which meets the ACA requirements. There are no deductibles to the users, just premiums and co-pays. The High Silver Plan offers all essential services that are required by the ACA. They are adapting to an HSA system in 2015 which will use “Virtual HSAs” to reward individuals (and penalties) for following doctors advise, assessment and for using the healthcare system wisely and not abusing things like ER use, etc (Goal 4).
Arkansas folks were concerned about the issue of non-emergent use of the ER, so they set up the system where there is no payment by the Insurers of any service utilized in the ER for non-emergent care. Contrary to the data we get from outside parties, it was repeatedly stated by the group from Arkansas that data from hospitals show that ER use since the plan incorporation in Arkansas has not risen one bit and has stayed level.
At the start of the plan, Arkansas basically had only one insurance provider, Blue Cross. The legislators set a goal to find a way to bring more insurers into the state to encourage competition and thus to reduce the cost of health care to users (Goal 1). As a result of using the private option, the insurance marketplace of companies has grown 4x statewide and is more competitive than ever. While it was stated that true overall costs will not be known for some time, they believe that the initial year costs set by insurers was overstated and that the state will be receiving a refund at the end of year 1.
Arkansas wanted to be sure to encourage new Insurers to enter the marketplace, and to be able to get customers (which helps them decide to enter the state). Arkansas uses their own portal for users to sign up and gets data from the Federal exchange as to who is eligible. If the user enters the data in the Arkansas portal, the system (through a questionnaire) defines whether or not they are frail and if not then allows them to choose the carrier (Insurer) for the coverage. If the user does not choose or the user comes in through the Federal exchange and does not define a carrier, the state will assign them to the carrier that has the least share in the geographic area (the state is split into areas, each with different carriers), up to a point where each Insurer has at least 25% of the market then assigns the additional people (which don’t make the choice on-line) equally among all carriers. This is called “Auto-Assign” and is a common practice (we see it in the business world where companies choose the insurer for their employees). This practice assures a new insurer coming into the marketplace of a share of the market and thus makes the risk less to them of coming into the state. The result is that more insurers are looking to enter the Arkansas marketplace.
Wrap around benefits were discussed. These are benefits that are required to be covered for Medicaid patients. Currently the only wrap around benefit offered to the new population in the private insurance market is non-emergency medical transportation. If other benefits are needed that are not in the private insurance, then the user is defined as “frail” and is moved to the Medicaid bubble. As seen above, the Medicaid program in Arkansas is used only for those who the program was originally intended. Arkansas is removing this wrap around benefit from the private market coverage in 2015, which will reduce the private market costs as well.
There are reports that people are opting to move from the new private market insurance to Medicaid in Arkansas thus adding cost to the state and not allowing them to realize the benefits. This was reported to be completely false. With the Arkansas system, the private market insurance plans offered will cover all services needed for non-frail patients so there is no reason (and nobody is doing this) for anyone to see advantage of Medicaid coverage over the private market insurance. Conversely, since the Medicaid program remains as it was intended and provides services for those that are frail, they are seeing no crossover of people moving from Medicaid to the private option. In fact, in the Arkansas law, they don’t allow the choice to move from Medicaid to the Private Option.
There are a few categories of individuals that have to be in Medicaid due to disabilities. This accounts for about 5% of the new population. Arkansas can then move other individual into the Medicaid bubble based upon medical needs and to keep them and the high charges out of the private option. Arkansas set a goal of 8-12% of the new population to remain in the Medicaid bubble, in an effort to keep private insurance costs low. They will adjust the requirements annually to keep the numbers within the range, with a real goal to be 10%. Currently they are at 11%.
The Legislature then set about to ensure sustainability of the program, well into the future. At present there is a premium tax charged to insurance users (we even have these in MT) which can be used at will by the states (in their case is amounts to $30-40M per year). Arkansas predicted large savings in uncompensated care by the hospitals. IN THE FIRST (4) MONTHS of the program, Arkansas hospitals are reporting a 30% drop in uncompensated care. There are going to be future efforts and changes to the system to move these savings (or some of them) to the state. Medicaid savings to the state per year are nearly $90M. Reduction of state programs (similar to InsureMT) show proof that this program is sustainable into the future, they can show proof of 10-15 years out. Predicted savings to the state was stated at $666M (after tax cuts, etc as listed below), over the first 10 years of the program which allows for the program to exist long term.
The Arkansas Republican group knew that they had good leverage with this plan with the Democrat Governor in the state. They knew that they could require reform and other key things to happen in exchange for this system and allowing the state to use the Federal money that they had paid into the system. Part of what they required was a total reform of the state Medicaid system. Part of the reform dealt with audit, creation of an office of Inspector General, and eligibility verification. Other reforms that ultimately were won were a ban on any state or federal funds to be used for promotion or advertising of the ACA (there has been none at all, and none to get people to sign up for the coverage), and the ban on payment for non-emergent use of ER services. Of high interest to MT would be that Arkansas also passed a state income tax decrease to their population equal to the amount saved by the State Medicaid program (currently estimated at $89M/year). Note: They are similar to MT in that they have a general fund balance (about $150M).
The statement being made by other parties that the ACA court decision resulted in a precedence that once a state expands coverage (by any means/waivers), that they could never repeal the system or coverage to the new population. This was answered to absolutely untrue. The Judge Roberts decision was discussed as were CMS statements and responses to this question that showed the delegation in Arkansas that any expansion can be stopped and rescinded upon the waivers being expired, not approved, or a bill sun-setting in a State Legislature. Prior to the Roberts decision, multiple states had expanded their Medicaid system and repealed after the fact. While cutting a benefit to the population is certainly not enjoyable, it has and can be done in the future. The Senator from Arkansas reminded us that even if a new court decision were made the resulted in a state that implemented an expansion not being able to rescind (which won’t happen), the state could simply refuse to receive the money or allocate the money and the Federal government would have to sue the state for the service to be continued which would not pass muster with Roberts and the Supreme Court. The Feds are also not likely to turn off Medicaid funding to a state in retaliation as they would then through the folks in the Medicaid bubble out which is political suicide.
The Arkansas legislature has to pass any appropriation with 75% of each House. Both houses are controlled by Republicans. They have to approve this on an annual basis. There are reports out there that the Legislature had huge battles and had to bribe members to continue with the appropriation. They reported this as completely false and offensive. They talked about a few members that used the appropriation as a negotiating point for pet bills that they wanted passed. They reminded us that it takes 75% in their Legislature to pass spending bills and that as such it always is a negotiation (and sometimes very passionate) to get anything across the finish line. The negotiations this year were not about the expansion bill, they were about using the 75% to get other bills (none healthcare) passed. They did state that the folks that do want to kill the bill are indeed using Primaries to try and change the makeup of the Legislature and that the result of those primaries is key to getting 75% moving forward. In their own words, the primaries are not about the system, which is working well, but more about rhetoric and anti-Obama sentiment.