Physician groups and American Enterprise Institute authors come out against ACA repeal without a replacement; Hawaii’s 1332 waiver is the first to receive federal approval; and North Carolina’s Governor moves to expand Medicaid.

GOVERNORS’ LETTERS TO CONGRESS ON POTENTIAL ACA REPEAL:

Democratic Governors Send Letters to Congress Warning Against ACA Repeal

Democratic Governors and their State Insurance Commissioners responded to a request from House Republican leaders for recommendations for new healthcare legislation by touting the positive impacts the ACA has had on their states and detailing the potential consequences of repealing the law.

• Connecticut. Governor Dannel Malloy (D) stated that repealing the law without an alternative would "effectively destroy the current marketplace and deny Americans access to quality, affordable and comprehensive health insurance." Insurance Commissioner Katharine Wade offered recommendations for improving the ACA.
• District of Columbia. Mayor Muriel Bowser (D) emphasized that any alternative proposals to the ACA must ensure that D.C. residents maintain quality coverage that is secure, accessible and affordable and that D.C. is not placed at financial risk.
• Louisiana. Governor John Bel Edwards (D) highlighted the successes of the State's Medicaid expansion and the risks associated with a block grant or per capita cap approach to Medicaid funding.
• New York. Governor Andrew Cuomo (D) warned that per capita caps or block grants would result in a "fiscal disaster" that would "endanger [New York’s] significant gains in cost savings, access and quality." In a separate statement, the Governor announced that ACA repeal would revoke coverage for an estimated 2.7 million residents and cut up to $3.7 billion in federal Medicaid funding for the State.
• Oregon. Governor Kate Brown (D) warned that ACA repeal would put hundreds of thousands of Oregonians at risk.
• Pennsylvania. Governor Tom Wolf (D) stressed the benefits of Medicaid expansion, highlighting expanded access to drug and alcohol treatment and Medicaid's role in addressing the opioid epidemic.

Florida: Governor Asks Congress for More Flexibility and Funding for State Medicaid Program

In a letter to Congressional Republicans, Governor Rick Scott (R) asked Congress to reimburse states 90 cents on the dollar (instead of the regular matching rate) for “the most vulnerable populations" to incentivize states to develop home and community based programs, and to grant Florida flexibility to enact "sensible reforms," such as charging co-payments for inappropriate adult emergency room use. Governor Scott also called for a per capita cap for the Medicaid program and requested that Congress allow Florida's 1115 waiver to become permanent. The letter also urged Congress to repeal the individual and employer mandates, allow insurance companies to sell across state lines, allow greater flexibility in the design of benefit packages and allow families to choose one insurance plan for the entire family. The letter is a response to Congressional Republicans' request for ideas and recommendations for new healthcare legislation.

Nevada: Governor Calls ACA Coverage Gains "Monumental"

In a letter sent to Congress and published on POLITICOPro, Governor Brian Sandoval (R) described the "monumental changes" in Nevada that resulted from the ACA, including the reduction in the State's uninsured rate from 23% to 12%. While states should have additional flexibility over healthcare policy, he wrote, Congress "must ensure that individuals, families, children, aged, blind, disabled and mentally ill are not suddenly left without the care they need." The letter, which is a response to Congressional Republicans’ request for input on new healthcare legislation, also requests a uniform federal reimbursement rate across all Medicaid populations, increased flexibility related to cost-sharing for Medicaid enrollees, and access to supplemental payments in a managed care delivery system.

NEW STATEMENTS ON ACA REPEAL:

President Obama Warns Against ACA Repeal Without a Replacement Plan

President Obama called repealing the ACA without a comprehensive replacement plan “irresponsible” in an article he authored for The New England Journal of Medicine. The President argues that repealing without a replacement plan could cause market instability and lead insurers to exit the Marketplace or increase premiums. Further, creating and passing a replacement plan will be difficult and complex and such legislation is not guaranteed to pass. The President calls for a bipartisan effort to improve the existing law.

Physician Groups Caution Congress Against ACA Repeal

The American Medical Association sent a letter to Congressional leaders urging Congress to present ACA replacement policies prior to repealing the law. The letter also calls it “essential” to maintain the insurance coverage gains made under the ACA. Separately, the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Obstetricians and Gynecologists, and the American College of Physicians sent a joint letter to Congress expressing concern that ACA repeal would have a “profoundly negative impact” on the healthcare system.

“Repeal and Delay” Risks Chaos and Disruption, Say American Enterprise Institute Authors

Joseph Antos and James Capretta of the American Enterprise Institute argue against “repeal and delay” in a new Health Affairs blog post, saying that the approach “carries too much risk of unnecessary disruption to the existing insurance arrangements” and is “unlikely to produce a coherent reform of health care in the United States.” Instead, Antos and Capretta write, Republicans should roll back pieces of the ACA in the same legislation that replaces the law.

OTHER ACA REPEAL ACTIVITY AND ANALYSIS:

Senate and House Take First Steps Towards ACA Repeal

The Senate has begun debating a Budget Resolution bill that was introduced by the Senate Budget Committee as the first step towards an expedited repeal of the ACA and includes instructions to the Committees with jurisdiction over Medicare, Medicaid, the Marketplaces, private insurance and taxes for reducing the deficit by $1 billion between 2017 and 2018. To move forward with repeal, the House and Senate must pass a Budget Resolution with instructions. After that, the House and Senate could vote on reconciliation legislation passed by the Committees.

Repeal Could Cost States Billions in Federal Funding and Millions of Jobs Each Year

Repealing the ACA’s Medicaid expansion and premium tax credits without a replacement plan could cost $140 billion in federal funding in 2019 and a total of $807 billion from 2019 through 2023, according to a new study from The Commonwealth Fund. Additionally, the study suggests that there will be 2.6 million jobs lost in 2019, nearly all in the private sector. States that have expanded Medicaid would incur the greatest funding and job losses. The report also provides analysis of business output lost, gross state product lost and state and local taxes lost, as well as a state-by-state analysis of the estimated impact of repeal.

Financial Burden of Uncompensated Care Would Fall to Providers Under Partial ACA Repeal

Approximately 30 million newly uninsured people would seek $88 billion in uncompensated care in 2019 and $1.1 trillion in uncompensated care between 2019 and 2028 under a partial ACA repeal, according to a new analysis by the Urban Institute. This increase in uncompensated care costs would only minimally be offset by the automatic increase in Medicaid Disproportionate Share Hospital funding (by $35 billion) during this same time. The authors conclude that the partial ACA repeal could lead to a fourfold increase in the amount of uncompensated care financed by providers. The study also estimates that healthcare spending by public and private insurers and households would decrease by $145.8 billion in 2019 and $1.7 trillion between 2019 and 2028. The authors model a “partial ACA repeal” on the reconciliation bill passed by Congress in January 2016 and vetoed by President Obama.

Republican Study Committee Releases ACA Replacement Proposal

The Republican Study Committee proposes fully repealing and eliminating all ACA provisions, including Marketplaces, the Medicaid expansion, ACA tax provisions, and the Center for Medicare and Medicaid Innovation, effective January 1, 2018, according to recently released ACA replacement legislation called the American Health Care Reform Act (AHCRA) of 2017. In place of the ACA, the legislation calls for a standard tax deduction ($7,500 per individual; $20,500 per family) for qualifying health coverage; expansion of health savings accounts and association health; sale of insurance products across state lines; and $25 billion in funding for state high-risk pools.

Pre-Existing Health Conditions Could Exclude up to Half of Americans From Health Coverage

Between 23% and 51% of Americans—up to 133 million non-elderly individuals—have a pre-existing medical condition that could have excluded them from the health insurance market prior to the ACA, according to a report from the HHS Assistant Secretary for Planning and Evaluation. (The lower estimate uses a narrow definition of “pre-existing condition” similar to criteria used by state high-risk pools pre-ACA; the higher estimate uses a broader definition similar to underwriting criteria used by insurers.) The share of individuals with pre-existing conditions who went without health insurance all year fell by 22% between 2010 and 2014, when the ACA’s insurance reforms took effect. Data are available only through 2014, but the report notes it is likely that more people with pre-existing conditions have gained access to coverage and care since then.

FEDERAL AND STATE MEDICAID EXPANSION AND REFORM NEWS:

Arkansas: Governor Hutchinson Voices Support for “Partial” Medicaid Expansion

Governor Asa Hutchinson (R) is encouraging President-elect Trump to allow states to limit the ACA Medicaid expansion to individuals earning up to 100% of FPL and receive the enhanced funding that is currently only available to states that expand to individuals earning up to 138% of FPL, according to the Arkansas Democrat-Gazette. Governor Hutchinson has also previously indicated support for greater state flexibility to implement work requirements and other programmatic changes through 1115 waivers.

Michigan: Medicaid Expansion Is Boosting State's Economy

Michigan's Medicaid expansion, which covers approximately 600,000 people, generated over 39,000 jobs in 2016, according to a new University of Michigan study published in the New England Journal of Medicine. The study also projects that economic activity associated with Medicaid expansion will yield approximately $145 million to $153 million per year in State revenue from income and sales tax from 2016 through 2021. In that same time frame, Michigan will save $235 million annually from reduced spending on services previously not covered under Medicaid but that now fall under the expansion, such as State mental health and correctional health programs. Combined, the study found that the additional State tax revenue and budget savings will fully offset the State costs of Medicaid expansion at least through 2021, the last year of the study period.

North Carolina: Governor Seeks to Expand Medicaid

In one of his first acts in office, Governor Roy Cooper (D) announced that he would seek approval to expand Medicaid and released a State Plan Amendment (SPA) that is open for public comment for 10 days. Republican State legislative leaders submitted a letter to CMS requesting that they reject the SPA, citing a 2013 law that requires legislative approval of Medicaid expansion. Governor Cooper maintains that the restriction does not apply to this SPA and that the law infringes on the Governor’s "core executive functions."

Ohio: Report Finds Medicaid Expansion Improves Health, Reduces Expenses

A report issued by the Ohio Department of Medicaid found that Medicaid expansion contributed to a decline in the uninsured rate for low-income Ohio adults from 32.8% in 2010 to 14.1% in 2014, the lowest uninsurance rate ever recorded in the State. Findings indicated that most Ohioans who gained coverage under Medicaid expansion were previously uninsured, and that over 40% of enrollees, citing better access to care, experienced a decline in unmet health needs under Medicaid expansion. The report was commissioned by the Ohio State Legislature and measured how expansion affected access to care, service utilization, health status, and financial burden. Following the Presidential election, the Ohio Governor's Office of Health Transformation has publically committed to maintaining Ohio's Medicaid expansion in its upcoming two-year budget plan.

Study Links Medicaid Expansion to Employment for People With Disabilities

People with disabilities in expansion states are significantly more likely to be employed compared with those in non-expansion states, according to a new study published in the American Journal of Public Health. In expansion states, 40% of individuals surveyed—community-living adults aged 18-64 reporting a disability—said they were not working because of their disability, compared to 48% in non-expansion states. The study’s lead author argues that the findings contradict suggestions by expansion opponents that expanding Medicaid discourages work.

FEDERAL AND STATE MARKETPLACE ACTIVITY:

Hawaii: CMS Approves Nation's First 1332 Waiver, Allows State to Waive SHOP Requirements

Hawaii has received the first 1332 waiver approval from CMS, which waives the ACA employer mandate and SHOP requirements. Hawaii has a longstanding employer-sponsored insurance requirement under the Hawaii Prepaid Health Care Act, which has more stringent requirements on employer-sponsored insurance than the ACA.

Nevada: Exchange to Gain Two Insurers Also Offering Medicaid Managed Care Plans

Aetna and Centene, which Nevada recently selected as new Medicaid managed care organizations (MCOs), plan to enter the Silver State Health Insurance Exchange, having agreed in their Medicaid contracts to offer at least one product on the State Exchange, according to a Department of Health and Human Services spokeswoman in the Las Vegas Review Journal. The other Medicaid MCOs—Health Plan of Nevada and Amerigroup—already offer Marketplace plans directly or through their parent companies.

S&P Calls 2017 Marketplace Premium Rate Increases a “One-Time Pricing Correction”

Premium increases in the ACA individual market for 2017 were a “one-time pricing correction,” according to a Standard and Poor’s analysis. More increases are likely to occur in 2018, though the analysis suggests that they will be well below this year’s levels. The analysis attributes the improved forecast to a maturing risk pool, premium rate increases, network changes, and regulatory changes such as stricter special enrollment period rules.

OTHER STATE & FEDERAL HEALTH REFORM NEWS:

New Hampshire: Report Finds Drop in Uninsurance, Growth in Individual Market

The percentage of State residents without health insurance fell from 11% in 2013 to 9% in 2014 and 6% in 2015, a decrease of approximately 37,000 residents from 2014 to 2015, according to a new report from the New Hampshire Department of Insurance. Much of the drop is attributable to growth in the individual market, which added 55,000 individuals between 2014 and 2016, including 40,000 through the State's Medicaid premium assistance program.

Report Proposes Recommendations to Preserve Cadillac Tax

A new report from the Urban Institute and the Brookings Institution examines common criticisms of the ACA’s excise tax on high-cost employer-sponsored health coverage, known as the “Cadillac tax,” and makes recommendations for improving the tax. Their recommendations include modifying the tax to account for variations in coverage costs based on employer size and geography.

HHS Selects Eight States to Pilot Certified Community Behavioral Health Clinics

The Department of Health and Human Services (HHS) has selected eight states (Minnesota, Missouri, New York, New Jersey, Nevada, Oklahoma, Oregon and Pennsylvania) to pilot a two-year Certified Community Behavioral Health Clinic (CCBHC) demonstration program to improve the integration of physical and behavioral healthcare, increase the consistent use of evidence based practices, and improve access to high quality care for Medicaid and CHIP beneficiaries with behavioral health issues. The demonstration will allow states to claim enhanced federal matching rates equivalent to states’ standard CHIP rates (not including the ACA’s temporary 23-percentage-point bump) for CCBHC services delivered by certified clinics; services provided to newly eligible individuals will be matched at the expansion enhanced federal matching rate. States will be paid using a prospective payment system.

STATE STAFFING UPDATE:

North Carolina: Former Secretary Named “Caretaker Supervisor” of Department of Health

Governor Roy Cooper (D) has named Dempsey Benton a "caretaker supervisor" to temporarily manage the Department of Health and Human Services (DHHS) pending completion of a cabinet appointment. Benton previously served as DHHS Secretary from 2007 to 2009 under then-Governor Mike Easley (D) and before that was Raleigh's City Manager for nearly 20 years. In December 2016, the Republican-led Legislature passed HB 17 requiring Senate approval for State department heads, which may prolong the cabinet appointment process.