State Policy Choices to Help Health State Policy Choices to Help Health Reform Achieve its Promise for Low-Reform Achieve its Promise for Low-

Income Children and Families Income Children and Families

Stan DornSenior Fellow, Urban Institutesdorn@urban.org 202.261.5561NASHP Conference: October 4, 2011

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This presentation is based in large part on prior work

• Stan Dorn, Ian Hill, Genevieve Kenney, and Fiona Adams, How Can California Policymakers Help Low-Income Children Benefit from National Health Reform? Prepared by the Urban Institute for The California Endowment, July 2011, http://www.calendow.org/uploadedFiles/Publications/Publications_Stories/TCE_Health_Reform_and_Children_WP_v2_final_pws.pdf

• Genevieve M. Kenney, Victoria Lynch, Jennifer Haley, Michael Huntress, Dean Resnick and Christine Coyer, Gains for Children: Increased Participation in Medicaid and CHIP in 2009, prepared by the Urban Institute for the Robert Wood Johnson Foundation, August 2011, http://www.urban.org/UploadedPDF/412379-Gains-for-Children.pdf

• Stan Dorn, The Basic Health Program Option under Federal Health Reform: Issues for Consumers and States, prepared by the Urban Institute for the State Coverage Initiatives Program of AcademyHealth, a National Program Office for the Robert Wood Johnson Foundation, March 2011, http://www.urban.org/UploadedPDF/412322-Basic-Health-Program-Option.pdf

• Stan Dorn, Matthew Buettgens, and Caitlin Carroll, Using the Basic Health Program to Make Coverage More Affordable to Low-Income Households: A Promising Approach for Many States, prepared by the Urban Institute for the Association for Community Affiliated Plans, September 2011 Note: this report contains state-specific cost and coverage estimates for BHP

• Ongoing research for The 100% Campaign (Children’s Defense Fund-California, Children Now, and The Children’s Partnership)

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Outline of Presentation

I. Potential gains for children and families under the Patient Protection and Affordable Care Act (ACA)

II. Obstacles to achieving those gainsIII. State policy strategies to overcome those

obstacles

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POTENTIAL GAINS FOR CHILDRENI.

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Potential gain #1: More eligible children enroll in Medicaid and CHIP

Most eligible children are enrolled today

But most remaining uninsured children are eligible

Source: Kenney et al. 2011. 5

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Why might more eligible children enroll?

• More of their parents receive coverage• Enrollment into Medicaid and CHIP is

streamlined• The individual mandate• The “welcome mat” effect

Publicity and outreach surrounding a new program brings in many who qualified under the old program

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Potential gain #2: Parents of low-income children gain coverage

Percentage of children and parents without coverage, by federal poverty level (FPL): 2009

What happens to children when their parents gain coverage?

• Children more likely to enroll

• Children more likely to obtain necessary care

• If parents are treated for mental health problems, children more likely to thrive

Source: Urban Institute tabulations of 2010 CPS-ASEC. 7

Why might low-income parents gain coverage?

Eligibility for Medicaid and CHIP in the median state: January 2011 (FPL)

Eligibility for subsidies under the ACA (FPL)

Source: Heberlein et al. 2011. 8

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Potential gain #3: uninsured children who are ineligible for Medicaid and CHIP gain coverage• Some uninsured children become newly eligible for

subsidies—Those whose incomes are too high for Medicaid and

CHIP but at or below 400 percent FPLCertain lawfully resident immigrants

Their immigration status makes them ineligible for Medicaid and CHIP because their states have not implemented CHIPRA options for expanded coverage

Includes children who were legalized during the past 5 years• Some uninsured children who are ineligible for

subsidies gain coverage because of—The individual mandateInsurance market reforms, in the case of special needs

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OBSTACLES TO ACHIEVING THOSE GAINS

II.

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Obstacles to increased enrollment and receipt of care

• Systems for eligibility determination, enrollment, and retention often discourage participation

• Limited funding for application assistanceFederal exchange grants may not pay for Navigators,

so other strategies needed• Public climate hostile to health reform• Limited provider participation in Medicaid and

CHIP reduces access to careSo even if more children and parents enroll, some will

have difficulty obtaining essential services

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New challenges with subsidized coverage in the exchange

• Premium charges will likely deter enrollment by some low-income families

• Out-of-pocket cost-sharing may deter utilization of some essential services

• The risk of owing money to IRS at the end of the year if income turns out to exceed projected levels could deter enrollment by some low-income families who qualify for tax credits

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Premiums and actuarial value of coverage for a family of three, at various income levels qualifying for subsidies under the ACA

FPL Monthly pre-tax income

Monthly premium

Actuarial Value (AV)

150 $2,316 $93 94%

175 $2,702 $139 87%

200 $3,088 $195 87%

225 $3,474 $249 73%

250 $3,860 $311 73%

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Note: assumes 2011 FPL levels.

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Examples of health plans at various actuarial value levels

Income AV Plan example

Annual deductible

Office visits

Inpatient hosp.

Prescr. drugs

150% FPL

93% Average HMO plan offered by employers

None $20 copays

$250 co-pay

$10/$25/ $45 copays

175% FPL

87% Federal Blue Cross-Blue Shield

$250 $15 $100 co-payment, then 10%

25% of all costs

Source: Congressional Research Service, 2009.

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Maximum repayment obligation for tax credit recipients, by income

Single filer Joint filer<200 percent FPL $300 $600200-299 percent FPL

$750 $1,500

300-399 percent FPL

$1,250 $2,500

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Federal CHIP risks• ACA

Requires maintenance of effort (MOE) through 2019Continues CHIP funding through 2015

• If MOE is repealed, or CHIP allotments end, CHIP children will probably be subject to the same exchange subsidy rules that apply to their parents

• ImplicationsCHIP children will be ineligible for subsidies if they are

offered affordable employer-sponsored insurance (ESI)ESI is considered affordable based on the cost of worker-only

coverage. The cost of dependent coverage is irrelevant! Children’s costs may rise and benefits fall, since exchange

subsidies are less generous than most CHIP programs

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STATE POLICY STRATEGIES TO OVERCOME THOSE OBSTACLES

III.

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Streamlining enrollment• Take advantage of—

Greatly enhanced federal funding to update eligibility-side information technology (IT) and link it to reliable data about eligibility 90/10 Medicaid match and 100% exchange dollars available

through December 31, 2015Free IT and other exchange products from Early

Innovator states and Enrollment UX 2014• Whenever possible—

Permit consumers to begin applications by self-identifying and consenting to disclosure of data

Use data matches rather than applicant documentation to establish eligibility

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Streamlining enrollment, continued• Simplify the initial application process by saving some questions for

later Ask about non-MAGI eligibility only after MAGI-based eligibility has

been determined Ask about eligibility for other public benefits only after the health

application is complete• Have one entity determine eligibility for all health programs• Do not put questions on the application form to distinguish newly

eligible adults from adults who could have qualified in 2009 Use other methods to claim enhanced federal match for new eligibles Provide the same benefits to newly eligible adults and other adults

• Expedite enrollment through data matches with SNAP and children’s Medicaid/CHIP records

• Note: as our understanding of recent regulations increases, more key decision-points will become clear

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Application assistance and outreach

• The importance of application assistance. For example: In a low-income Latino community in Boston, CBO assistance

raised eligible children’s participation from 57% to 96% (Flores et al. 2005)

• StrategiesRecruit safety net providers to sign up patientsUse exchange call centers to complete applicationsCombine Medicaid, CHIP, and exchange dollars into one system

of consumer assistance that helps low-income households apply for insurance affordability programs and enroll into coverage

Leverage participation of local businesses and philanthropiesConsider special outreach targeted at Latinos and young adults

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Medicaid provider participation: Strategies to consider

• Selective contracting to remedy targeted access problems• Help consumers locate participating providers • Tele-medicine• Increased use of non-physician and non-dentist providers• FQHC contracting with community-based dentists, using

cost-based reimbursement• Streamlined claims payment• Coordinated planning by local providers• Ultimately, may need targeted reimbursement rate

increases in many statesFederally funded increases for 2013 and 2014, while helpful, are

time-limited and exclude many important providers and services

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Two ways of using the Basic Health Program (BHP) option to build on current programs and make coverage more

affordable for low-income parents1. Create an integrated, rebranded program to

serve all low-income residents of the stateAdults up to 200% FPL and children up to income-

eligibility limits for CHIP receive Medicaid/CHIP-level coverage

Sliding-scale cost-sharing possible, as income rises above 133% FPL

In the “back room,” combine federal dollars under BHP, Title XIX, and Title XXI

2. Expand a separate CHIP program to include adults up to 200% FPL, continuing current benefits and cost-sharing levels

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Subsidy eligibility under the ACA, without BHP:Using the example of CA, where “Healthy Families”

provides CHIP coverage to 250% FPL

Children Adults – citizens and qualified immigrants

Adults – lawfully present immigrants who are not qualified

>400% FPL No subsidies

250-400% FPL Exchange

138-250% FPLHealthy Families Exchange

138-200% FPL

0-138% FPL Medi-Cal Medi-Cal Exchange

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Subsidy eligibility under BHP approaches 1 and 2

Children Adults

>400% FPL No subsidies

250-400% FPL

Exchange

200-250% FPL

Golden Bear Care

Exchange

138-200% FPL Golden Bear Care0-138% FPL

Children Adults

>400% FPL No subsidies

250-400% FPL

Exchange

200-250% FPL

Healthy Families

Exchange

138-200% FPL

Healthy Families

0-138% FPL Medi-Cal

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Approach #1 Approach #2

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Federal law #1: Who qualifies for BHP?

• RequirementsMAGI at or below 200 percent FPLIneligible for Medicaid that covers essential health

benefits, CHIP, MedicareCitizen or lawfully present immigrantNo access to affordable, comprehensive ESI

• Major groups in 2014, under current lawAdults 133-200 percent FPLLawfully present immigrants 0-133 percent FPL, ineligible

for Medicaid and CHIP. E.g.: Green card holders during their first five years Citizens of the Marshall Islands, other COFA nations

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Federal law #2: What happens to consumers in BHP?

• No subsidized coverage in the exchange• State contracts with plans or providers

All essential benefits must be coveredPremiums may not exceed levels that would be charged in

the exchangeActuarial value may not fall below specified levelsMLR may not fall below 85 percent

• Note: states can provide more generous coverage, such as the coverage furnished by Medicaid and CHIP

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Federal law #3: BHP dollars

• The Federal government pays 95 percent of what it would have spent for tax credits and OOP cost-sharing subsidies if BHP members had enrolled in the exchangeCould be a little higher, depending on HHS

interpretation• Federal dollars

Go into state trust fundMust be spent on BHP enrollees

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Potential advantages to families of these approaches to BHP

• Parents get much more affordable coverage, so more likely to enroll and obtain needed care. According to Urban Institute modeling of average costs per adult:Annual premium payments fall from $1,218 to $100

under this approach to BHPAnnual out-of-pocket spending falls from $434 to $96Total annual savings: $1,456

• No risk of year-end tax debts to IRS, so enrollment more likely

• Parents and children together in same plan• Access to safety-net plans

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Other potential advantages• State can save money by shifting Medicaid beneficiaries into federally-

funded BHP States could instead shift them to the exchange’s individual market, but that

would greatly raise beneficiaries’ costs without saving more money for states Eligibility groups vary by state. Examples may include:

Adults covered through 1931 and 1115 waivers Pregnant women Lawfully resident immigrants now covered with state-only money Women with breast and cervical cancer Medically needy : special advantages of BHP, since it can be structured to slow “spend-

down”• Churning between Medicaid and the exchange, which raises

administrative costs and undermines continuity BHP approach #1 helps, because families up to 200% FPL remain in the unified

low-income program Moving the threshold from 133% FPL to 200% FPL reduces churning, because higher

income levels have fewer subsidy-eligible people and less income volatility BHP approach #2 doesn’t help, because it involves 3 subsidy programs for

adults, rather than 2

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Potential disadvantages to families of this approach to BHP

• More limited access to providers, since provider payments may be at or near Medicaid levelsUrban Institute modeling shows, to cover adults with

Medicaid-level benefits and typical CHIP cost-sharing, average annual amounts of:$4,600 in baseline BHP costs$5,665 in federal BHP payments

o Allows provider payments > Medicaido But this depends on how the exchange is administered

Notwithstanding this increaseBHP adults would have more limited provider networks than in

the exchangeBHP implementation could place increased demand on

Medicaid networks• Limited access to commercial plans

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Other potential disadvantages

• Smaller exchangesExchanges still large: cover 8.2 % rather than 9.8% of

residents < age 65, in average stateSome potential reduction in leverage and increase in

per capita administrative charges• Potential for higher average risk in individual

market• Inherent uncertainty of a new federal program• Providers gain less from the ACA, because BHP:

Reduces the expansion in private coverageIncreases the expansion in public coverage

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One final BHP comment

• BHP can keep CHIP-level coverage for many CHIP children if: Federal lawmakers repeal ACA’s maintenance-of-effort

requirements; or Federal CHIP allotments end after 2015

• In either case, BHP could cover non-Medicaid children if they: Have family incomes at or below 200 percent FPL; andAre not offered ESI that the ACA considers to be

affordable

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Conclusion

• Low-income children and families can experience significant gains under the ACA

• Important obstacles may limit those gains• State policy choices can go a long way towards

overcoming those obstacles

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