Consumers could use Marketplace subsidies to purchase off-Marketplace plans under proposed Senate bill; Oklahoma and Massachusetts will pursue Medicaid and Marketplace waivers; and a Medicaid expansion bill fails in Kansas following the Governor's veto.

FEDERAL AND STATE MARKETPLACE ACTIVITY:

Senate Republicans Introduce Bill to Allow Off-Marketplace Use of ACA Tax Credits

Republican Senators Lamar Alexander (TN) and Bob Corker (TN) introduced legislation last week that would allow individuals to use ACA premium tax credits to purchase off-Marketplace plans in counties where there are no participating qualified health plans, and exempt these individuals from the individual mandate. The temporary measure would be in place through the end of the 2019 plan year. Off-Marketplace plans purchased with ACA tax credits would still need to comply with state insurance regulations, though it is not clear if those plans would be required to meet the federal definition of "minimum essential coverage."

ACA Risk Adjustment and Reinsurance Programs Improved Insurers' Financial Outcomes, Report Finds

Reinsurance and risk adjustment payments under the ACA were successful at reducing insurer losses, according to a new study published in Health Affairs. Prior to the payments, claims exceeded monthly per enrollee revenues by $90–$397 for the 30% of insurers with the highest claims costs (not including administrative expenses). Following the payments, revenues exceeded claims costs by $0–$49. According to the report's authors, the analysis differs from previous studies in that it uses insurers' paid claims costs associated with ACA enrollees relative to the market average and it analyzes all insurers that were covered by the ACA risk adjustment program.

Iowa: Wellmark Will Stop Selling Individual Plans and Exit the Marketplace in 2018

Wellmark Blue Cross and Blue Shield, the State's largest insurer, announced it will stop selling new individual plans and will withdraw from the Marketplace in 2018, requiring 21,400 Iowans to find new coverage. Wellmark cited $90 million in Marketplace losses, a lack of young, healthy enrollees, and excessive exemptions to the individual mandate penalty as reasons for its decision. The other two plans that offer individual policies in the State have not yet decided if they will offer plans in 2018.

Minnesota: State Establishes Reinsurance Program

A bill implementing a $542 million reinsurance program became law after Governor Mark Dayton (D) refused to sign or veto it; the Governor cited concern that the program will be funded by the State rather than through a tax on health insurers, but acknowledged the plan is needed to preserve insurer participation in the individual market and lower premium rates. The State will request federal funding assistance through a section 1332 waiver for the reinsurance program, which was passed in response to 2017 premium rate increases for the individual market that ranged from 50% to 67%.

Oklahoma: 1332 Waiver Task Force Makes Detailed Recommendations

The State will pursue "sequential" 1332 waivers and waiver amendments beginning in summer 2017, with implementation beginning in 2018, according to a paper released by the State's 1332 waiver task force. The initial waiver will seek to give the State more responsibility over rate review and plan qualification (Oklahoma is one of only four states that does not currently do rate reviews). Subsequent waivers and amendments would include requests to: replace the use of HealthCare.gov with the Insure Oklahoma platform; change the premium subsidy eligibility level to 0%-300% of FPL; modify mandated benefits; implement state quality measures; promote value-based payments and care coordination within plans; broaden the age rating ratio to 5:1 (not permissible under current 1332 parameters); address the "family glitch" in determining insurance affordability; implement consumer incentives through "consumer health accounts"; eliminate metal tiers; and change rules for special enrollment requests, premium payment grace periods, and exemptions. The report includes detailed descriptions for all proposed strategies.

FEDERAL AND STATE MEDICAID EXPANSION AND REFORM NEWS:

Senate Passes Bill to Allow States to Restrict Grant Funding to Exclude Abortion Providers, Including Planned Parenthood

The Senate passed a bill reversing an Obama Administration regulation that prohibited states from restricting federal Title X family planning grants to exclude entities that provide abortions, like Planned Parenthood, except in limited instances. Vice President Mike Pence broke a 50-50 tie in the chamber, after two Republicans, Susan Collins (ME) and Lisa Murkowski (AK), opposed the bill. The bill now moves to President Trump's desk, where it is expected to be signed.

Iowa: Medicaid Agency Implementing Risk Corridors for MCOs for Medicaid Expansion and Disabled Populations

The State has amended its managed care organization (MCO) contracts, with CMS approval, to include risk corridor payments to MCOs to offset some MCO losses for the Medicaid expansion and disabled populations, according to documents obtained by the Des Moines Register. The State will cover all MCO losses for the expansion population provided at least 94% of plan revenue is spent on services. For disabled Medicaid enrollees, the State will cover losses for costs that are 8%-12.5% above projections. State officials estimate the risk corridor payments will cost the State $10 million and the federal government up to $225 million. The State's three Medicaid MCOs have reported more than $450 million in losses since April 2016, the start of State's Medicaid managed care program. Risk corridors are increasingly common in Medicaid managed care.

Kansas: House Fails to Override Governor's Medicaid Expansion Veto

Governor Sam Brownback (R) vetoed legislation that would have expanded the State's Medicaid program, citing a lack of work requirements and saying the bill "burdens the state budget with unrestrainable entitlement costs." The veto was upheld in the House on Monday after a motion to override the veto fell three votes short.

Massachusetts: State Signals It Will Apply for Multiple Waivers

Secretary of Health and Human Services Marylou Sudders sent a letter to CMS Administrator Seema Verma, indicating the State will apply for federal waivers to more closely align Medicaid benefits with commercial benefits, extend Medicaid beneficiaries' permitted length of stay in Institutions for Mental Disease, and finance care for individuals dually enrolled in Medicaid and Medicare through a fully capitated model. The State will also seek a federal waiver to eliminate employer reporting requirements under the employer mandate and request enhanced flexibility for alternative models of employer-based insurance, such as by expanding the use of health reimbursement accounts. The letter is a response to a March 14 letter to governors from Verma and HHS Secretary Tom Price that describes ways CMS will work with states to expand Medicaid program flexibility.

New York: Governor Endorses County Medicaid Contribution Relief Bill

Governor Andrew Cuomo (D) endorsed federal legislation that would increase federal Medicaid funding to New York State by $2.3 billion, allowing the State to eliminate counties' Medicaid spending obligations if a county agreed to lower property taxes by the same amount. The endorsement is in response to a provision added to the American Health Care Act that would have cut $4.7 billion from New York's Medicaid budget.

South Dakota and Tennessee: Republican Governors Remain Hesitant on Medicaid Expansion Following AHCA Failure

Tennessee Governor Bill Haslam (R) and South Dakota Governor Dennis Daugaard (R) said they are unlikely to convene legislative special sessions to consider Medicaid expansion following the failure of the American Health Care Act. Governor Haslam ordered a special session in 2015 to consider his Medicaid expansion plan but stated, "It's awfully early for that right now." Governor Daugaard's Chief of Staff said healthcare at the federal level remains in flux.

Virginia: Medicaid Launches Addiction and Recovery Treatment Services

Virginia has launched an Addiction and Recovery Treatment Services (ARTS) benefit for Medicaid managed care enrollees, which expands coverage of community-based substance use disorder (SUD) services, including short-term residential treatment, increases provider rates for treating SUD for the first time in a decade, and implements peer support services for individuals affected by SUD or other mental health conditions. As an amendment to Virginia's section 1115 demonstration, ARTS aims to integrate physical health and addiction treatment services in an effort to combat the opioid epidemic.

OTHER FEDERAL HEALTH REFORM UPDATES:

Report Details Impact of ACA Repeal on American Indians and Alaska Natives Nationwide

Repealing the ACA would limit access to care, worsen health disparities, and reduce local economic growth for American Indian and Alaska Native (AI/AN) populations, according to a report prepared for the Montana Healthcare Foundation and Robert Wood Johnson Foundation. The report also finds that repealing the ACA and implementing a block grant or per capita caps for Medicaid may not adequately account for the 100% federal medical assistance percentage paid for services provided by the Indian Health Service or in Tribal health facilities.

ACA Improved Healthcare Affordability and Access, Had No Impact on "Risky" Behaviors, Study Finds

A working paper from the National Bureau of Economic Research finds that the ACA increased insurance coverage and reduced the probability of enrollees reporting financial barriers to care in the first two years of implementation, but had no impact on rates of "risky" health behaviors, such as smoking or alcohol consumption. The study estimates that the ACA reduced financial barriers to care by 5.1 percentage points in Medicaid expansion states and 2.6 percentage points in non-expansion states, while increasing health insurance coverage by 8.3 percentage points in expansion states and 5.3 percentage points in non-expansion states.

Out-of-Pocket Health Costs Estimated to Grow 40% for Seniors by 2035

Total out-of-pocket healthcare spending for adults aged 65 and older is expected to rise 40% between 2012 and 2035 under current law, according to a study published in Health Services Research. For an older adult with a median income, out-of-pocket costs are estimated to increase from 10% of income to 14% of income, and for low-income people, the costs would increase from 5% of income to 25% of income (the lowest income quintile will continue to pay nothing due to Medicaid cost-sharing protections). Reasons for increased costs include: income growth for the elderly is slower than for younger populations; supplemental coverage is expected to erode as options become more expensive; and the ACA reduced some payments for Medicare Advantage plans, pressuring those plans to raise premiums while lowering benefits.

STATE STAFFING UPDATES:

Ohio: New Department of Insurance Director Named

Jillian Froment has been appointed the director of the Ohio Department of Insurance, replacing Lieutenant Governor Mary Taylor, who had served as director along with her Lieutenant Governor post since 2011. Froment was formerly the deputy director.

South Carolina: Medicaid Director Resigns

Christian Soura, director of the Department of Health and Human Services, which oversees the State's Medicaid program, has resigned. Soura was also serving as the president of the National Association of Medicaid Directors. Deirdra Singleton, the current Medicaid deputy director of health programs, will serve as acting director until a replacement is appointed.