Manatt on Health Reform: Weekly Highlights

Minnesota's Task Force recommends maintaining their State-based Marketplace while Oregon considers bringing back theirs; CMS narrows the criteria for special enrollment periods; and President Obama seeks an extension of full federal funding for states coming late to Medicaid expansion.


Minnesota: Healthcare Task Force Approves Continuing State-Based Marketplace and Expanding MinnesotaCare

The Health Care Financing Task Force voted to approve a package of more than thirty recommendations, including continuing the State-based Marketplace, MNsure, rather than transitioning to, citing the potential high cost of the switch and an interest in maintaining state control. The Task Force also recommends expanding eligibility for MinnesotaCare, the State's Basic Health Program, to cover individuals with incomes up to 275% of the federal poverty level (FPL) (up from 200% of FPL), improving affordability of coverage for an additional 41,200 Minnesotans. The draft Task Force report notes that the State would be required to seek a Section 1332 State Innovation Waiver to expand its MinnesotaCare program. Additionally, the Task Force approved maintaining the provider tax that funds MinnesotaCare and other state health programs, which was scheduled to phase out in 2019. The full package of recommendations will be submitted to Governor Mark Dayton (D) and the State legislature later this month.

Oregon: State Revisits Establishing State-Based Marketplace

The Oregon Department of Consumer and Business Services (DCBS), which oversees the State's Marketplace in partnership with the federal government, has announced it is seeking proposals for technology solutions to operate its small business and individual Marketplaces. The agency will present options to the Legislature in February after receipt of RFP responses. In 2015, the State switched from its State-based Marketplace, Cover Oregon, to the federal platform due to a challenging rollout of eligibility and enrollment technology. Proposed federal regulations would impose a 3% user fee for eligibility and enrollment functions performed by the platform, estimated to cost Oregon approximately $13 million. A DCBS spokesperson said the agency hopes the RFP will help them determine a more affordable Marketplace solution.

CMS Eliminates Some Special Enrollment Periods, Clarifies Others

CMS Administrator Andy Slavitt announced the agency is taking action to stabilize the insurance risk pool in response to insurers' concerns over the eligibility of and utilization by individuals who enroll during special enrollment periods (SEPs). CMS is eliminating six SEPs considered no longer necessary, predominantly related to early Marketplace eligibility and enrollment technical errors. CMS also clarified that individuals are ineligible for the "permanent move SEP" when admitted to a hospital for treatment in a different area. Insurance companies have stated that individuals who enroll during SEPs tend to maintain coverage for fewer than four months, compared to eight to nine months for those who enroll during open enrollment, and utilize up to 55% more services than open enrollment enrollees, as reported by the New York Times.

Nearly Three-Quarters of Tax Payers Required to Reconcile 2014 Tax Credits Have Done So

The IRS reported to members of Congress that 3.5 million taxpayers have filed the IRS form (Form 8962) used to reconcile their 2014 tax credits; 4.8 million were required to do so. Of those who filed through October 2015, approximately 41% were owed additional payments through reconciliation (averaging $640), while 51% had received excess advanced premium tax credit during the year (averaging $860). Eight percent neither owed nor were owed payments based on their tax return. Overall, the average tax credit was valued at $3,430. Of the 1.3 million people who have not yet reconciled their tax credits from 2014, one-quarter have not filed a return (and did not request an extension) and three-quarters filed a return but did not include Form 8962. Additionally, the letter notes that nearly 8 million taxpayers have paid an individual shared responsibility payment—averaging $210—and that the majority of these taxpayers still reported a refund. Finally, 12.4 million taxpayers claimed one or more exemptions, the most common of which was for low-income individuals residing in states that did not expand Medicaid.

Many Marketplace Enrollees Spend Over 10% of Income on Health Expenses, According to Report

A new report by the Urban Institute and the Robert Wood Johnson Foundation finds that many individuals who purchase coverage on the Marketplaces continue to face financial burdens despite financial protections in the Affordable Care Act. Marketplace enrollees who earn between 200% and 500% of the federal poverty level (FPL) have median healthcare expenditures that range from 10.8% to 14.5% of their income. Generally, those in fair or poor health and those over age 45 are most likely to face high median financial burdens. Those in fair or poor health with the highest medical needs are estimated to spend 23.2% of their income on premium and out-of-pocket payments. While the authors acknowledge that reports of financial hardship related to paying medical bills have decreased significantly since implementation of the ACA, they conclude that affordability protections on the Marketplaces should be further addressed to reduce the risk of reductions in Marketplace enrollment.


President Obama Announces Intent to Provide Full Medicaid Expansion Funding for States Yet to Expand Eligibility

President Obama plans to seek congressional approval to extend enhanced funding for non-expansion states that decide to expand Medicaid, according to a blog posted by the White House. A proposal in the President's 2017 budget will provide any state that takes up the Medicaid expansion option with the same three years of full federal funding and gradual phase down of that funding experienced by states that expanded in 2014. Under current law, funding for Medicaid expansion will be reduced to 95% in 2017 and will phase down to 90% by 2020 for all states, regardless of when they expanded.

Nebraska: Bipartisan Group of Lawmakers Introduce Medicaid Expansion Bill

Senator John McCollister (R) and 16 co-sponsors introduced a bill (LB 1032) requiring the State Department of Health and Human Services to submit a waiver to CMS to expand Medicaid by purchasing qualified health plans (QHPs) on the Marketplace. The legislation would enroll the majority of expansion adults into QHPs, excluding the medically frail and those with cost-effective employer sponsored insurance (ESI), for whom an ESI premium assistance program is proposed. Most enrollees with incomes greater than 50% of the federal poverty level would be required to pay a premium of 2% of their income and unemployed enrollees would be referred to a newly-proposed employment program. Three previous Medicaid expansion proposals have failed in Nebraska and some Republican legislators have already voiced their opposition to this bill. It is estimated Medicaid expansion would cover an additional 77,000 individuals.

Alabama: Medicaid Commissioner Requests an Additional $157 Million from Legislature

Medicaid Commissioner Stephanie Azar asked lawmakers for an additional $157 million in funds for next year's Medicaid budget, a 23% increase that would bring the State's total Medicaid expenditures to $842 million. Azar said that the increase is being driven by inflation, federal government overpayments that must be paid back, and the cost of creating regional care organizations to transition to managed care, which would be halted without the increased funds. Medicaid is currently the State's largest General Fund expenditure, accounting for more than one-third of spending. The previous Medicaid budget included a $37 million carryover and a one-time $20 million payment from an oil spill settlement.



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