California Eliminates Children’s Health Program, Gears Up for Shift to Medi-Cal
As a result of a June budget deal between Governor Jerry Brown and the legislature, the state will eliminate its version of the Children’s Health Insurance Program/Healthy Families and shift the 863,000 child beneficiaries to MediCal, the state’s Medicaid program. AB 1494 provides for this transition starting no earlier than Jan. 1, 2013. The California Legislative Analyst’s Office prepared an analysis of the merits and concerns of this change.
The reason for the move is two-fold: saving money by reducing payments to managed care plans and achieving administrative savings and preparing for PPACA’s coming changes. Estimates identify $13 million in savings this fiscal year, $58 million in fiscal year 2013-2014 and $73 million annually once the transition is complete. The federal health reform law allows CHIP to expire in 2015. California policymakers believe they are getting a jump on the transition since the children currently covered will be eligible for the Medicaid expansion or subsidized health insurance through the exchanges. State officials still await approval for the shift from the Centers for Medicare and Medicaid Services (CMS).
The California Health and Human Services Agency, in collaboration with other state agencies developed a strategic plan and the legislature is conducting hearings to ensure that covered children will not experience interruptions in their medical care. Advocates express concern that the MediCal system does not have the provider capacity to absorb the additional beneficiaries. Some legislators question the wisdom of notifying families affected by this change before CMS weighs in.
“With federal approval still pending, I am concerned we seem intent on proceeding with the transition, said Senator Mark DeSaulnier (D), Chair of the Budget Subcommittee on Health and Human Services and a member of NCSL’s Executive Committee. “[The transition plan] fails to guarantee system readiness. It is critical that proper coordination occur with stakeholders before children are transitioned, yet misinformation about this transition has already become apparent in our communities, with subscribers, providers, health facilities, community groups, and families. Lacking proper coordination for a smooth transition, it remains unclear if we can proceed without jeopardizing children’s access to health care services.”
Inside This Issue
New Jersey Health Insurance Exchange Update
On October 18, the legislature passed the New Jersey Health Benefit Exchange Act (SB 2135), which establishes a health insurance exchange as outlined in the federal health reform legislation. This is the second time this year New Jersey’s legislature passed a bill establishing an exchange. Governor Chris Christie vetoed the previous bill in May, citing the then-outstanding ruling on PPACA from the Supreme Court. Christie has not announced his plans for SB 2135. State law requires action within 45 days of adoption.
Maine Sues Feds to Drop Medicaid Beneficiaries
A fight about the PPACA maintenance of effort (MOE) provision continues between states and the federal government. Maine’s attorney general, William Schneider, filed a lawsuit in federal court last Friday.
In June, the legislature approved cuts to the state’s Medicaid program, in an effort to save nearly $20 million. To balance the budget, the cuts took effect Oct. 1. The cuts include eliminating coverage for 19- and 20-year-olds; non-pregnant, non-disabled people with incomes above 100 percent of federal poverty guidelines; and some individuals dually eligible for Medicare and Medicaid. In total, the changes eliminate coverage for about 36,000 people.
The cuts challenge the maintenance of effort (MOE) provision within PPACA, which requires states to maintain their March 2010 Medicaid eligibility levels. States that do not comply with MOE could lose their Medicaid matching dollars from the federal government. Thus, Maine asked permission to amend its state plan, in a request to the Centers for Medicare and Medicaid Services (CMS). The state also requested CMS act on their request within 30 days, so they could meet the legislature’s Oct. 1 deadline, or pay the state’s share of Medicaid costs while they deliberated. CMS has not responded.
In its lawsuit, Maine contends that the MOE requirements are unconstitutional federal overreach, in the same way the Supreme Court ruled the federal government could not compel states to expand Medicaid. While CMS did not act as fast as Maine requested, officials have until Nov. 1 to respond, given the statutory 90-day response window.
More information, including comments from Maine’s Medicaid commissioner and attorney general are available here.
High “Cadillac Tax” Burden in Bay State
Boston’s Pioneer Institute for Public Policy Research released a brief examining the effects of the federal health reform’s so-called “Cadillac Tax” on Massachusetts’ average-earners. The federal provision levies an excise tax on insurers for higher-priced insurance coverage, where costs exceed $10,200 for an individual, and $27,500 for a family, beginning in 2018. The PPACA contains higher tax thresholds for plans that cover people in high-risk professions (e.g., fire fighters). There is concern that the tax could result in employers choosing less generous benefit packages or some employees paying more for coverage.
The Bay State has the highest individual market premiums in the nation. Thus, a tax targeting high-cost plans will likely affect people of all incomes, who may not necessarily enjoy above-average health care benefits. The report points out: “Over half the individuals on private insurance plans working for employers with three or more employees will be subject to this tax in 2018, and many more if healthcare costs continue to rise faster than inflation.” Nationally, the average cost of individual policies is $5,615 and families $15,745, a 4 percent increase from 2011, according the “Employer Health Benefits” survey by Kaiser Family Foundation released in September 2012.
Report Assesses Selling Insurance Across State Lines
A new report from Georgetown University studied laws in six states—Georgia, Kentucky, Maine, Rhode Island, Washington and Wyoming—that “require, encourage or study the feasibility of allowing the sale of health insurance across state lines or the formation of interstate compacts.” These states are the only ones with such laws on the books.
States retain the power to allow and regulate insurance purchases across state lines. The Patient Protection and Affordable Care Act (PPACA) authorizes states to enter interstate compacts for health care choice and establishes some regulatory parameters. The Secretary of the U.S. Department of Health and Human Services must approve the compacts, but states may enter compacts that are not federally approved.
Visit NCSL’s “Out of State Health Insurance” web page for more information and details on the six states with such laws. Eighteen states have considered such legislation.
New Medicaid Budget Report
The rate of Medicaid spending growth hit a near record low in fiscal year 2012 according to a 50-state Medicaid budget survey by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured and Health Management Associates. Authors of the report attribute this to a slowdown in enrollment related to economic recovery and to the considerable work by states to control costs. They predict this trend to continue into fiscal year 2013.
Key findings of the survey indicate that containing and reducing costs remains a top priority. Nearly all states implemented at least one new policy to lower Medicaid spending in fiscal year 2012; restricting or lowering provider reimbursement rates was the most common of those strategies. Due to the PPACA maintenance of effort requirements, Medicaid eligibility levels either remained the same as those that were in place in March 2010 or they had been expanded. Thirty-two states reported enhancing eligibility standards or simplifying the enrollment and renewal process in fiscal year 2012 and 21 states plan to do so next fiscal year. The survey also indicated that states continue to seek out program reforms to improve the quality of care for beneficiaries, such as expanding managed care, improving coordination of care for people with chronic diseases and creating patient-centered models of care delivery (e.g., health homes and medical homes).
States are also implementing policies and programs related to the PPACA; almost every state reported upgrading its Medicaid eligibility systems, which has a 90 percent federal match. According to the report, “states reported new opportunities to cover or improve coverage under the ACA but also highlighted challenges related to implementation timeframes, the need for additional federal guidance and additional administrative resources to implement the law.”
Brief Says Pay-for-Performance a Mixed Bag
The October issue of Health Affairs includes a Policy Brief on Pay-for-Performance. At issue is the effectiveness of paying health care providers based on results—e.g., preventing hospital-acquired infections, adopting electronic health records, and improving patient-reported experiences—rather than for services rendered, as they are typically paid now. Pay-for-performance gets a lot of attention in the policy realm as a strategy to improve the quality, efficiency, and overall value of health care while reducing costs. PPACA created several initiatives to encourage this kind of payment restructuring. In addition, private and public health programs are increasingly turning to this model. The policy brief concludes that pay-for-performance has mixed results and that the “experience to date with pay-for-performance initiatives has raised a number of questions that require more research and experimentation.” Read the full brief for more details.
NCSL Launches New Health Reform Web Resource
The Federal Health Reform: State Implementation Entities, Reports, and Research web page provides access to state-based reports, research papers, fiscal analyses, web-sites, timelines and presentations related to the Patient Protection and Affordable Care Act. Please visit the page and let us know if there is a report (timeline, website, analysis, etc.) written by or for a state legislature, state agency or state health reform implementation group that is missing from this list? Please click here to send that report to us.