Manatt on Health Reform: Weekly Highlights - May 2017 #5

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

CBO says the House repeal and replace bill could destabilize the individual insurance market in some states; Indiana posts a work requirement amendment to its Medicaid expansion waiver application; and states allow insurers to file two sets of rates in case Trump Administration terminates CSR payments.


CBO Projects AHCA Will Lead to Coverage Losses, Spending Cuts, Market Instability in Some States

The updated CBO score of the AHCA, as passed by the House on May 4, estimates that 23 million individuals would lose their insurance and federal Medicaid spending would be cut by $834 billion by 2026 under the bill. These estimates are similar to previous scores of the bill, though CBO now anticipates significant changes to the individual market in states that waive the ACA's essential health benefit (EHB) and/or community rating provisions under changes first proposed by Representative Tom MacArthur (R-NJ), which had not previously been scored. In states making modest changes to these provisions, average premiums would fall by 10% to 30%, but in states with more aggressive waivers, the individual market may become unstable as young and healthy individuals shift into less expensive plans, making premiums unaffordable for older, less healthy individuals. According to CBO, annual out-of-pocket costs for services such as maternity care, mental health, and substance abuse treatment could increase by "thousands of dollars" in states that narrow the EHB requirement. CBO estimates that approximately half of the population lives in states that would be impacted by the MacArthur amendment, with one-sixth subject to more aggressive waivers.

Lawmakers and Healthcare Leaders React to CBO's AHCA Score

The updated CBO score of the AHCA has drawn swift reactions from lawmakers and the healthcare industry. Key Republican Senators Dean Heller (NV) and Bill Cassidy (LA) called for changes in the AHCA's treatment of Medicaid expansion and pre-existing conditions, while Democratic governors, including Dannel Malloy (CT), Steve Bullock (MT), Andrew Cuomo (NY), and Jay Inslee (WA), sharply criticized the bill. The American Hospital Association, American Medical Association, and AARP reiterated their opposition, and HHS Secretary Tom Price and Office of Management and Budget Director Mick Mulvaney expressed doubts about the accuracy of CBO's analysis.


HHS Report Compares 2017 Premiums to 2013 Individual Market Premiums

A new report from the HHS Assistant Secretary for Planning and Evaluation finds that average Marketplace premiums in the 39 states that use were 105% higher in 2017 than they were in 2013, prior to ACA implementation ($476 versus $232), though increases ranged from 12% in New Jersey to 222% in Alabama. States with benefit mandates similar to the ACA, like New Jersey which already required community rating in 2013, had smaller premium increases. The report notes several limitations to its findings, including that it excludes data from State-based Marketplaces which have lower average premiums and that 2017 enrollees are older and less healthy than 2013 individual market enrollees. The report also does not take into account that premium tax credits reduce the cost of coverage for a majority of Marketplace enrollees.

Democrats Seek Answers on Trump Administration Statements to Insurers on CSR Payments and AHCA Support

Ranking Democrats on the Senate Finance and HELP Committees and the House Ways and Means and Energy and Commerce Committees sent a letter to CMS Administrator Seema Verma requesting further information in response to a Los Angeles Times report that the Trump Administration offered to fund cost-sharing reduction payments in exchange for insurance executives' public support for the AHCA. The letter calls the alleged actions a "wholly inappropriate" use of federally appropriated funds.

States Adjust Marketplace Rate Filing Processes in Response to Uncertainty

Arkansas, Connecticut and New Mexico have each announced changes to their 2018 rate filing processes for Marketplace insurers due to continued uncertainty over federal cost-sharing reduction (CSR) payments.

  • Arkansas: Marketplace issuers will be permitted to submit multiple sets of rates for 2018 to hedge against a possible reduction in federal subsidies, though only one set will be considered for approval. Alternative rates can be submitted "for informational purposes" and will be considered if changes to CSR payments are instituted.
  • Connecticut: The State pushed back the deadline for Marketplace insurers to determine whether to offer plans in 2018 from early July to September 1, in response to continued uncertainty about federal funding. Two insurers, ConnectiCare Benefits and Anthem, have not yet filed rates.
  • New Mexico: Insurers in the Marketplace will be permitted to submit two sets of rate requests for their plans for 2018 in light of continued uncertainty over CSR payments.

Blue Cross Blue Shield Plans Announce 2018 Marketplace Participation and Rate Requests in Three States

Regional Blue Cross Blue Shield (BCBS) plans reacted to continued uncertainty on cost-sharing reduction payments, with regional plans requesting a 22.9% rate increase in North Carolina and withdrawing from the Marketplaces in Kansas and Missouri, requiring 67,000 enrollees to find other coverage. In most areas it served, BCBS of Kansas City was the only Marketplace insurer. BCBS of North Carolina, the only insurer to offer Marketplace plans in all North Carolina counties, cited uncertainty around CSR payments for its requested rate increase, noting the increase would have otherwise been 8.8%. Cigna, which sells Marketplace plans in five North Carolina counties, requested a 31.9% rate increase.

New Hampshire: Senate Considers Individual Market Stability Bill

The State Senate Health and Human Services Committee endorsed an amendment to HB 469 that would give health insurance regulators broad powers to stabilize the individual market, including resuming risk adjustment programs, reopening high risk pools, and creating a reinsurance program. The amendment also allows the State to pursue federal waivers as needed. Amended HB 469 now goes to the full Senate for consideration and then to the House.

Oklahoma: Bill Clears Way for New Insurance Stabilization Program

The Legislature approved a bill to create a new State health insurance stabilization program, which could include a high-risk pool, reinsurance, or a hybrid approach, contingent on receiving federal funding support. The bill also creates a new non-profit entity to manage the program. The bill, which now goes to Governor Mary Fallin (R) for consideration, follows a report published in March by the State's 1332 waiver task force that recommended a series of waivers to reform the State insurance system.


Health Spending Proves Lower Than Federal Projections, and Is Growing at Historically Slow Rates

National health spending and Medicaid spending both grew at slower-than-expected rates between 2010 and 2015, according to an Urban Institute analysis of CMS national health expenditure projections. Cumulative Medicaid spending between 2010 and 2015 was $600 billion less than CMS had projected in 2010 (shortly after the ACA passed), due in part to some states not taking up Medicaid expansion. Over this time period, Medicaid spending grew by 6.5%, well below CMS's 2010 projection of 9.9%. National health spending grew by 4.3%, compared to CMS's 2010 projection of 6.5%. Some of the lower-than-expected spending growth is attributable to a slow economic recovery following the recession, unexpectedly low inflation, higher cost-sharing requirements in employer-sponsored insurance (leading to lower use of care), and Medicaid cost-containment efforts in the states. Growth in national health spending is expected remain below historical standards, but still faster than GDP. The report also reviews premium cost growth in the ACA Marketplaces, finding that premium growth has varied nationally and remained low in many regions, particularly in more populated areas.

Indiana: Work Requirements Added to Medicaid Expansion Waiver Application

The State released for public comment an amendment to its Medicaid expansion waiver extension application that would require all able-bodied beneficiaries to work at least 20 hours per week, be enrolled in full- or part-time education, or participate in a job search and training program. Pregnant women, medically frail individuals, primary caregivers of a dependent, enrollees being treated for a substance use disorder, and enrollees over age 60 would be exempt from the work requirement. The original waiver extension application was submitted to CMS in February and is pending approval; the amendment is open for public comment until June 23. Indiana's Medicaid expansion was developed by current CMS Administrator Seema Verma and Center for Medicaid and CHIP Services director Brian Neale.

Maryland: Governor Signs Legislation Combatting Opioid Crisis

Governor Larry Hogan (R) signed legislation that requires healthcare providers to prescribe the lowest effective opioid dose and allows prosecutors to seek an additional 10 years on sentences for drug dealers who knowingly sell fentanyl and its analogs. Governor Hogan also signed a bipartisan bill to increase availability of prescription drugs used to treat opioid use disorders, broaden the authority of the State Department of Health and Mental Hygiene to control dangerous substance registration, and develop additional services to treat substance use disorders including expanded drug courts and new crisis treatment centers.

Nebraska: Developmental Disabilities Waivers Approved

The federal government approved the State's request to consolidate its adult and children's home and community-based services waivers and renew the consolidated waiver for five years. The combined waiver is intended to mitigate the difficulty of transitioning between child and adult programs for developmentally disabled individuals.


Indiana: Medicaid Director Steps Down

Medicaid Director Joe Moser has stepped down "to pursue other opportunities." Allison Matters Taylor, former general counsel for the State's Medicaid agency, will serve as interim director.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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