Manatt on Health Reform: Weekly Highlights

Increased plan choice on is linked to lower premium growth; Arizona seeks changes to Medicaid expansion; and California and New York release detailed Marketplace and Medicaid enrollment reports.


Choice in Health Insurance Marketplace Plans Linked to Lowered Premium Growth in 2015

A Department of Health and Human Services (HHS) report indicates that the number of Federally-facilitated Marketplace (FFM)-eligible consumers who could choose from at least three issuers increased from 70% in 2014 to 86% in 2015, and that increases in competition resulted in lower premium growth. The average growth of second lowest cost silver plan premiums was 8.4 percentage points lower in counties with a net gain of at least one issuer in 2015 compared to counties with the same or fewer issuers. Across all FFM states, only 8% of counties experienced a net loss of issuers and the average growth rate for second lowest cost silver premiums was 2%.

CMS Allows State-Based Marketplaces to Continue Using Federal Exemptions Service

CMS released new guidance that allows State-based Marketplaces (SBMs) to continue utilizing the Department of Health and Human Services (HHS) to process exemptions from the individual shared responsibility payment. Previously, SBMs were provided the option to leverage the federal process or develop their own for the 2014 or 2015 coverage years, but were required to establish their own process by the start of the 2016 open enrollment period. SBMs must inform HHS in writing whether they will adopt the HHS option. An SBM electing to establish its own process is not required to set up an electronic system to do so.

Health Spending Projected to Increase by 5.8% Annually Over Next Ten Years

According to a new report released by CMS, the growth in national health care expenditures is estimated to average 5.8% for 2014 through 2024, an increase from the historically low average 4% increase seen from 2008-2013. While growth is expected to be higher than in recent years, it is substantially lower than prior decades; from 1990 to 2007, the average annual increase in health care spending was 7.3%. The share of the economy devoted to health care is estimated to increase from 17.4% of GDP in 2013 to 19.6% in 2024. This growth in health expenditures is partially attributed to individuals having obtained health insurance coverage as a result of the Affordable Care Act, overall economic growth leading to more people obtaining care, and an aging population.

Almost 72 Million People Enrolled In Medicaid or CHIP

According to CMS’s latest Medicaid/CHIP enrollment report, 71.6 million people are enrolled as of May 2015, representing 12.8 million new enrollees since October 2013, when the initial Marketplace open enrollment period began. Enrollment in Medicaid expansion states has increased by approximately 29% since October 2013 while states that have not expanded Medicaid reported an increase of approximately 10% over the same period.

Inspector General Finds Low Enrollment and Budget Deficits in CO-OPs

HHS' Office of the Inspector General released a report on enrollment and sustainability trends for the Consumer Operated and Oriented Plan (CO-OP) program, established by the ACA to expand the number of health insurance plans available in marketplaces. The report found that 21 of 23 total CO-OPs had incurred net losses as of December 31, 2014 and that 13 of the 23 CO-OPs had significantly lower enrollment than initially projected. The OIG recommends CMS continue to place underperforming CO-OPs on corrective action plans, work with state insurance departments to address underperforming CO-OPs, establish criteria for when a CO-OP is no longer sustainable, and pursue remedies for recovery of funds from terminated CO-OPs in accordance with loan agreements. CMS concurred with the recommendations and is taking additional steps to oversee CO-OP compliance including external audits, site visits, and additional financial reporting.


Arizona: Governor Proposes Premiums, Co-pays, and Work Requirements for Medicaid Program

Governor Doug Ducey (R) plans to submit a waiver request in the fall for a new Medicaid program—called CARE (Choice, Accountability, Responsibility and Engagement)—that would introduce new requirements on most Medicaid expansion enrollees. In addition to co-payments for certain services (capped at 3% of income), CARE would require enrollees to deposit a premium payment equaling 2% of income into a health savings account (HSA), which could then be used for services not covered by Medicaid. Enrollees over 100% of the federal poverty level would be disenrolled for six months for failure to make the CARE payments. The plan requires that members complete one wellness incentive and be employed, attending school, or actively seeking employment. The governor noted his efforts will include legislative initiatives to limit lifetime enrollment in Medicaid to five years and eliminate non-emergency medical transportation. While some elements of the CARE plan have been approved previously in other states, many go beyond what CMS has approved to date.

Pennsylvania: State Completes Transition to Traditional Medicaid Expansion

Governor Tom Wolf (D) announced that Pennsylvania has completed its transition of Medicaid beneficiaries from the alternative Medicaid expansion spearheaded by previous Governor Tom Corbett (R) to “HealthChoices,” a traditional Medicaid expansion program. Nearly 80,000 Pennsylvanians were converted to the new program via data system updates in this final push, and all enrollees who transitioned will have their coverage through the HealthChoices plan begin September 1. The governor also announced that a total of 440,000 individuals are now enrolled through the State’s Medicaid expansion, with 150,000 having enrolled directly in the HealthChoices plan launched at the end of April.

Tennessee: State Applies to Expand Program for Disabled Beneficiaries

Tennessee has requested an amendment to its TennCare II waiver that would allow the State to participate in the Medicaid Buy-In program, under which states may extend coverage to workers with disabilities who have earnings in excess of traditional qualifying incomes. Under Tennessee’s proposed “Employment and Community First CHOICES” program, the State would cover those with family income up to 250% of the federal poverty level. Comments on Tennessee's proposal are due on August 5, 2015.


California: Enrollment Report Offers Range of Marketplace and Medicaid Coverage Details, Including Renewal Rates

A quarterly report jointly released by Covered California and the California Department of Health Care Services highlighted application, eligibility and enrollment data from October 1 through December 31, 2014 for all insurance affordability programs in California, with information that ranged from the number of applications received to applicant demographics, health plan enrollment by carrier and metal tier, renewal rates and number of appeals and hearing results. The report indicated that 92% of the 1.1 million Marketplace enrollees eligible for renewal successfully re-enrolled between October and December 2014. Of the individuals who renewed coverage, 39% explored their plan options, and of those that explored, 85% remained with the same carrier. The report also indicated that of renewals processed to date, 82% of Medi-Cal enrollees successfully renewed.

New York: Most New Marketplace Enrollees Previously Uninsured

Eighty-nine percent of new enrollees in the New York State of Health marketplace were uninsured at the time of application, New York State of Health reported, an increase from 81% of new enrollees in 2014. Overall, more than 2.1 million New Yorkers enrolled in health coverage through New York State of Health during the 2015 open enrollment period, double the number of enrollees during the State's first open enrollment period. A total of 86% of 2014 Marketplace enrollees renewed their coverage in 2015, three-quarters of whom received a subsidy to reduce the cost of their insurance. The State's complete open enrollment report provides further detail, including Marketplace demographic data, breakdowns of qualified health plan enrollment by region and plan type, and consumer assistance use.


Kansas: Governor Announces CHIP Budget Cuts

Governor Sam Brownback (R) announced $62.6 million in budget cuts and fund transfers in an effort to balance the Kansas Fiscal Year 2016 budget. The single largest cut, $17.6 million, will come from the State Children’s Health Insurance Program (CHIP), which provides health coverage to children in low-income families who earn too much to qualify for Medicaid. The Brownback administration attributed the cut to an increase in the federal matching rate for CHIP across states for Fiscal Years 2016 and 2017. The governor’s budget director noted that the State plans to maintain the program’s current level of services.



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