There are many moving pieces in national health reform implementation. This past Saturday, the Connector Board met to begin discussing the Connector’s role in putting together the national health reform implementation puzzle (see the materials from the meeting).
Glen Shor began the retreat with an overview of the agenda. He commented that while Massachusetts has a head start in some sense, “we are also planning as we’re running an exchange, which is like changing a tire while driving a bus.” Shor continued, “There is no question the Connector will look different in 2014. The question is how different.”
The day’s agenda covered:
- Political landscape for national and state health care reform
- Overview of national health reform
- Substance of national health reform
- Medicaid expansion
- Exchange shopping model
- Exchange operating model
- Individual mandate
- Pre-emption (To what extent does federal law pre-empt state law?)
- Waiver flexibility (state’s flexibility to do things differently than the Affordable Care Act sets out)
- Implementation process
It was a long day, and our full report is below the fold.
Political Landscape for National and State Health Care Reform (Joan Fallon)
According to Joan Fallon, there will certainly be political challenges to implementing reform on the national front. Nationally, the 2011 session is looking to be one of confrontation rather than compromise. With the shift of control in the U.S. House, there will be attempts to repeal or weaken the Affordable Care Act. In fact, there are repeal attempts underway in 21 states; including lawsuits on the individual mandate and states threatening to pull out of the Medicaid program. On the flipside, the U.S. Senate will not support repeal, and President Obama would veto any repeal attempts that made it through the Senate. Certainly, the 2012 presidential election will have a substantial impact on the future of national health reform implementation.
Fallon went on to highlight early successes of national health reform, most of which went into effect on September 23rd, that make a strong case for the Affordable Care Act:
- Tax credits for small employers
- Early retiree reinsurance program
- Elimination of cost-sharing for preventive services
- Coverage up to age 26 on family policies
- No lifetime maximums in health insurance plans
Certainly, the Connector will be under the national microscope during the implementation process. Accordingly, the Connector has begun developing strategies to respond and, as Fallon put it, “set the record straight.” The plan includes building and utilizing a rapid response group, continuing to build on MA health reform’s success, and making swift progress in implementation to show it is doable.
On the Massachusetts front, health reform continues to have strong public and policymaker support. However, there may be some pressure within the state legislature to simply align with the minimum requirements national health reform, rather than uphold Massachusetts policies that may be stronger than national policies. As Nancy Turnbull put it, “there will be pressure to sink to the lowest common denominator.”
It is important to continue to put the human face on health reform by sharing stories of real people who benefit. The Connector did this nicely in their 2010 progress report; the Board echoed the importance of real stories, and requested a process for sharing them with Board members. Shor commented that the Connector is working with the Blue Cross Foundation to create a toolkit/”how-to” guide on exchanges to share with other states.
High Level Overview of National Health Reform (Bob Nevins)
Bob Nevins showed an entertaining and informative video from the Kaiser Family Foundation video to introduce the main issues in national health reform.
Medicaid Expansion (Stephanie Chrobak)
As of 2014, the Affordable Care Act requires state Medicaid programs to expand to coverage to all adults under age 65 with incomes up to 133% fpl, with enhanced federal matching funds. States have the option to implement the expansion sooner without enhanced federal matching. In Massachusetts, adults under 133% fpl represent about 60% (~90,000) of the current CommCare membership; 13,000 people who are eligible but unenrolled in CommCare; and other individuals who may have access to employer-sponsored insurance, for example.
An interagency team, including Medicaid, the Connector, ANF, and DHCFP is engaged in rigorous analysis to determine when and how to implement this change. The team will take into consideration the fiscal impact on the state, adequacy and quality of coverage, and operational capacity. Stephanie Chrobak commented that the interagency team plans to engage other stakeholders, and the Connector is planning to move forward with the FY12 MCO procurement process under the assumption that the Medicaid expansion will not happen in FY12.
Board member Ian Duncan thought it would be especially important to look at the fiscal implications for the Connector of moving a large population of CommCare members over to Medicaid. Glen Shor responded that the fiscal impact on the Connector will certainly be considered, and reminded the Board that while a large portion of the CommCare population will move to Medicaid, the Affordable Care Act will also bring new populations into the Connector, including people with incomes between 300-400% fpl.
Exchange Shopping Model (Roni Mansur)
The Affordable Care Act requires people who purchase within the exchange to be lawful residents (including “special status” legal immigrants). You can really see the Connector structure in the exchange model laid out in the federal law. Like the Connector, the exchange shopping model relies on an integrated approach. However, there are some differences.
The exchange shopping model includes: non-group (subsidized and unsubsidized coverage offered in Platinum, Gold, Silver, Bronze, and Catastrophic tiers); the same plans and rates must be offered inside and outside the exchange; and risk adjustment is used across the entire non- and small group market. The model sees subsidized, unsubsidized individuals and small employers in one exchange. Plans within the exchange must offer the essential benefits package, as yet to be determined by HHS.
According to Duncan, one important change to note is the introduction of catastrophic plans into the exchange, which is a big change for Massachusetts. Kenney responded that catastrophic plans will essentially do away with Young Adult Plans, and are available to people under 30 years old; those who have received a hardship exemption; and people who have access to unaffordable coverage.
Celia Wcislo and Nancy Turnbull raised concerns about adverse selection. Shor responded that the Connector will need to look closely at the exchange rules to create a level playing field and reduce adverse selection.
Exchange Shopping Model: Individual/Non-Group (Kaitlyn Kenney)
Under the Affordable Care Act, to be eligible for subsidies, people must be lawful residents, under 400%fpl and not have access to certain other insurance. While Massachusetts uses income buckets to determine subsidy levels, the Affordable Care Act uses percentages. For example, under the ACA, people at 133% fpl will pay around 2% of their income in premiums, while those at 400% fpl will pay about 9.5%.
In addition, the Affordable Care Act allows states to opt for the Basic Health Plan to cover people between 133-200% fpl, who would otherwise be eligible for subsidies through the exchange. This option directs states to engage in competitive bidding process to negotiate premiums, cost-sharing and benefits, much like the CommCare program does now. If taken up, the state would receive 95% of the premium and cost-sharing tax credits that these individuals would have received through the Exchange.
Turnbull commented that the question of whether to wrap subsidies at the state’s expense is important, as is the state’s potential role in funding additional mandated benefits (above federal requirements). She cited the importance of the Connector weighing in on essential health benefits regulations. Shor acknowledged Turnbull’s point by noting that currently, Massachusetts covers those between 133-300% fpl with 50% reimbursement from the federal government; in 2014, the feds will foot the entire bill for covering people between 133-400% fpl. However, the benefits and cost-sharing are not the same in the state and federal plans.
Jon Gruber commented that it will be helpful to lay out the financial pieces: How much will it cost to wrap subsidies? How much will it cost to keep what we have in Massachusetts right now?
Exchange Shopping Model: Small Group (Kevin Counihan)
Before 2016, states have the option of defining small groups as employers with 100 or fewer employees OR with 50 or fewer employees. In 2016, small employers will be defined as employers with 100 or fewer employees, and in 2017, states can allow large employer participation in the exchange. Tax credits are also available through the exchange for small employers in 2014.
Exchanges can implement a Choice model, where employees choose a health plan that offers coverage at the level selected by the employer (Bronze through Platinum) and/or exchanges can implement a sole source model, much like the Connector’s Business Express. Under the ACA, employees are not able to use a Section 125 plan to purchase through the Exchange unless their employer offers health insurance to all full-time employees through the Exchange. Counihan noted that this provision will have implications for the Connector’s Voluntary Plan, which currently has about 650 employers and 2200 subscribers.
The Connector will work with DHCFP to decide employer size requirements, assess the future of existing programs (Contributory Plan, Business Express, Voluntary Plan), and develop a mechanism to outreach to eligible small businesses.
Exchange Operating Model (Bob Nevins)
Under the Affordable Care Act, exchanges must perform the following core operational functions:
-Eligibility determination (Office of Medicaid currently does this)
-Operation of toll-free hotline (Connector already does this)
-Maintenance of a website to display plans (Connector already does this)
-Assignment of price and quality rating (Currently, CommChoice plans must meet Connector’s Seal of Approval)
-Presentation of plan benefit options in a standardized format (Connector already does this)
-Calculator to determine actual cost of coverage, taking into account premium tax credits and cost-sharing credits
-Provision of information to the U.S. Treasury and employers
The Connector’s current operating and customer service model and the federal exchange model are quite different. The structure of the premium tax credit is also different from the current CommCare subsidy structure. The Connector uses a coordinated payment model, in which the enrollee pays their subsidized premium to the exchange, while the ACA uses an independent payment model in which the U.S. Treasury pays the health plan a premium subsidy and the enrollee pays the health plan their share of the premium. Massachusetts will need to move to the federal model. The Connector plans to work with the Office of Medicaid to figure out an integrated and approach to eligibility, enrollment, customer service, and premium billing.
Terry Dougherty stated that Medicaid needs a new eligibility system to deal with the change of using modified adjusted gross income (MAGI), rather than adjusted gross income, which Medicaid currently uses. There will be opportunities to make the entire process better. Wcislo commented that the state should not only look at cost efficiencies, but also how well people are served. Gruber echoed this by saying that “we need to look at the financial and people impact.”
Individual Mandate (Kaitlyn Kenney)
The federal health reform law requires individuals to carry “minimum essential coverage” (MEC) or pay a penalty (sound familiar?). However, federal and state exemptions to this rule differ. One of the main differences is affordability standards. While Massachusetts uses a progressive schedule based on income brackets and premium dollar amounts, the federal schedule deems insurance affordable if the premium is 8% or less of your income. The federal penalties are also different, and like the federal affordability requirements, are more onerous on low-income residents than the Massachusetts requirements.
Preemption Analysis (Ed D’Angelo)
Unlike ERISA, which blocked any state laws that relate to employee benefits plans, the Affordable Care Act only preempts state law when it prevents the implementation of federal law. The main potential differences between state and federal law are affordability/individual mandate and minimum coverage standards. D’Angelo said these are policy issues, not legal issues.
Dolores Mitchell said it would make more sense to harmonize the Affordable Care Act and Massachusetts individual mandate policies, instead of having both the federal and state mandate. Wcislo cautioned that the state should look at how much revenue the state would lose by going to the federal individual and employer mandate standards. Turnbull added that the state needs to think about implications for consumers.
State “Flexibility” or “Waiver” Eligibility (Kaitlyn Kenney)
Kenney stated that Massachusetts has some flexibility in how they implement national reform, although currently formal waivers will not be available until 2017 (that is, if the Brown-Wyden bill doesn’t pass). According to the Affordable Care Act, the U.S. Secretary of HHS presumes that exchanges in operation before January 1, 2010 meet the standards of the law.
Health Reform Implementation Process (Kaitlyn Kenney)
EOHHS pulled together a large interagency working group, with smaller topic-based teams, to oversee national health reform implementation. The working group plans to engage stakeholders and also use the Office of Consumer Information and Insurance Oversight (OCIIO) as a resource. The state is also seeking funding opportunities through federal grants available under the Affordable Care Act. For example, the Connector was awarded a $1 million planning grant and will seek additional exchange funding opportunities when they become available in the spring. Shor assured the Board that their voice will be heard in this process; he also expressed the importance of other stakeholder involvement in implementation.