Manatt on Health Reform: Weekly Highlights

Several federal reports topped the news this week: 2015 Marketplace plans are more affordable than last year; more than three-quarters of applicants through the Federally Facilitated Marketplace have selected a plan to date; and, health spending growth is at its lowest rate since 1960. In other news, Utah’s Governor released an alternative Medicaid expansion plan and North Carolina and Texas, two states that have resisted expansion to date, debate Medicaid reform.


Better Affordability and Greater Choice in the 2015 Federally Facilitated Marketplace

An HHS report found that 70% of individuals who return to the Federally Facilitated Marketplace (FFM) will find a lower premium plan in the same metal level than they had in 2014, before tax credits are applied. HHS noted that nearly 80% of FFM enrollees can buy coverage for $100 or less after tax credits are applied in 2015. The report also finds more consumer choice: over 25% more issuers are participating in the FFM this year, and 91% of consumers (up from 74%) are able to choose from 3 or more issuers.

1.5 Million Applicants in First Two Weeks of Open Enrollment Season

HHS' newly-released enrollment statistics indicate that during the first two weeks of open enrollment, 765,000 of the 1.5 million total applicants on have selected a health insurance plan. The applicants are roughly split between new and returning customers. The majority of plan selections occurred during the first week of open enrollment, when 300,000 of 500,000 applicants picked plans. Reflecting on the enrollment numbers, HHS Secretary Burwell said the marketplaces are "off to a solid start," but the administration will need many more sign ups to reach their projected 2015 enrollment figure of approximately 9 million enrollees, a figure that includes both renewing and new enrollees.

Support for CHIP Funding Extension Builds

At a meeting of the House Energy and Commerce Subcommittee on Health, Chairman Representative Joe Pitts (R) expressed support in his opening remarks for extending CHIP funding “in some fashion.” The Chairman also noted that in the future CHIP should “complement private health coverage” and “[target]…those who are most vulnerable.” Witnesses from the U.S. Government Accountability Office (GAO) and the Medicaid and CHIP Payment and Access Commission, among others, provided testimony on implications of not extending funding for CHIP; GAO estimated that if CHIP were eliminated, 1.9 million children may not qualify for Medicaid or for coverage in the Marketplace due to a parent having employer-sponsored coverage. This follows the House Energy and Commerce Committee’s release last week of letters from 39 state governors who expressed support for extending CHIP and outlined specific recommendations for program improvements.

Health Spending Growth Hits Lowest Rate Since 1960

National health spending grew 3.6% from 2012 to 2013, according to a report published in Health Affairs, which marked the lowest growth rate on record since 1960 according to the New York Times. The Obama Administration attributed the small net increase primarily to limits on Medicare payments to certain providers, cuts in federal spending from 2011, and the proliferation of high deductible private – all offset somewhat by increased state and Federal Medicaid spending. The figures did not include the effect of the ACA's Medicaid expansion, which began the year after the analysis was conducted.


Illinois: House Fails to Pass Bill to Establish a State-Based Marketplace

The Illinois House failed to pass Senate Bill 636, which would have established a State-based Marketplace, before the end of the legislative session, as reported by the Chicago Tribune. The bill gained momentum in the House in recent weeks after concerns were raised about the potential for a U.S. Supreme Court ruling to end subsidies for Get Covered Illinois enrollees. While the Legislature could consider the bill again in future sessions, the State will no longer be eligible to receive an estimated $270 million in federal funding to support the cost of transitioning to a State-based Marketplace.

Minnesota: Marketplace Revises Fiscal Budget to Reflect Projected Drop in Enrollment

MNsure’s Board of Directors voted unanimously to approve the 2015 fiscal year budget, which forecasts a total revenue of approximately $5.3 million, a decrease of $1.8 million from earlier estimates. According to MPRnews, this reduction follows MNsure's projection that only one-third of the number of individuals who enrolled in 2014 coverage will enroll in 2015, largely due to the exit of PreferredOne, MNsure's largest and lowest-cost provider in 2014. Despite this year's loss in revenue, the budget for fiscal years 2016 and 2017 indicate an overall surplus.

North Carolina: Subcommittee Calls for 2015 Medicaid Reform Legislation

The Subcommittee on Medicaid Reform/Division of Medical Assistance (DMA) Reorganization released a Final Report to the Joint Legislative Oversight Committee on Health and Human Services recommending several principles on which to reform Medicaid. The goal of the reform – to reduce costs – was based on an analysis from the State’s Fiscal Research Division demonstrating that the current fee-for-service Medicaid model will continue to increase Medicaid costs. North Carolina Medicaid is currently a fee-for-service model with care management provided through a statewide medical home model. In recent years, policymakers have debated whether to implement both provider-led efforts (such as ACOs) and commercial managed care plans to manage total Medicaid cost. This report called for the enactment of legislation during the 2015 Session to establish a new healthcare system within three years that would include, among other features, shared financial risk.

Texas: Senate Committee Recommends “Texas-Specific” Medicaid Reforms

The Texas Senate Committee on Health and Human Services, charged by Lieutenant Governor David Dewhurst (R) to identify cost-effective alternatives to Medicaid and the ACA, released a report recommending the State pursue a federal waiver to operate Medicaid as a block grant, use local funding to help the uninsured enroll in private coverage rather than Medicaid, and implement cost-saving mechanisms, including health savings accounts and high-deductible emergency care plans. The three Senate Democrats serving on the Committee submitted an accompanying letter that recommended “closing the coverage gap” between Medicaid and the Marketplace and accepting all federal funds available under the ACA.

Utah: Governor Unveils the Healthy Utah Medicaid Expansion Plan

Governor Gary Herbert (R) revealed the details of his alternative Medicaid expansion plan – Healthy Utah – which aims to enroll nearly 95,000 eligible Utahns earning up to 133% of the federal poverty level (FPL) in qualified health plans (QHPs) on the State’s Small Health Business Options Program (SHOP) Marketplace. The plan contains cost-sharing obligations that increase with income, including premiums for individuals above 100% FPL, and would allow children eligible for traditional Medicaid to enroll in a parent’s QHP. Unemployed individuals, with some exceptions, would be automatically enrolled in an integrated work program, though the State is exploring options to enforce compliance with the benefit. The State would also offer the option to enroll in a plan with a higher co-pay for non-emergency visits to the emergency room ($50) and a lower premium, or a lower co-pay and higher premium. Eligible Utahns determined to be medically frail would enroll in traditional Medicaid expansion, and those with cost-effective employer-sponsored insurance would receive premium assistance to enroll in those plans. Healthy Utah, which requires approval by the State Legislature and the federal government, would be a three-year pilot program and cost the state $4.6 million in 2016 and $25.5 million in 2019.



pursuant to New York DR 2-101(f)

© 2023 Manatt, Phelps & Phillips, LLP.

All rights reserved