Kelly McCutchen’s thoughts on the Good, the Bad and the Ugly
The Good
Medicaid
· Puts Medicaid on a budget for the first time
· Eligibilty verification allowed more frequently than once a year
· Reduces retroactive coverage to one month instead of three months
· Allows work requirements for non-elderly, non-disabled, non-pregnant adults
· Limits provider taxes (states gaming the system)
· Reversion to the mean on block grants – allows CMS to raise or lower block grants by up to 2% a year to bring states to within 25% of the national average
· Safety net funding for non-expansion states (should be frontloaded to 2018 and 2019, before tax credits are available)
· DSH changes for non-expansion states are nice, but not very fiscally significant
HSAs
· Contribution limit increased up to match out-of-pocket costs
Insurance Regulations
· Eliminates individual mandate and employer mandate penalties
· Significant amounts of insurance returned to the states: Mandates eliminated on Medical Loss Ratios, Actuarial Value and Essential Health Benefits
· Age rating mandate of 3:1 loosened to 5:1
1332 Waivers
· Elimination of requirements that plans be comparable in coverage, must cover as many people, limits on purchasing catastrophic plans, and requirement for all plans to be in the same risk pool, etc.
· Presumptive approval if you don’t increase federal spending:
· Six-month window on approvals
· Eight year term (with automatic renewal?)
· Can waive the federal rules governing the definition of individual and small group coverage? (according to Heritage)
Pre-existing conditions / Risk adjustment
· Six month waiting period is better than 30% penalty in the House Bill
· Funding for invisible risk sharing program, high risk pools and/or risk adjustment by states. Milliman actuarial study, for example, showed IRSP reduces premiums by more than 30% across the board at cost of $3.3 billion a year for all states
The Bad and Ugly and Recommended Fixes
Medicaid
· Expansion should be frozen immediately in all states
· Continuous enrollment provision eliminated (?)
Insurance Regulations
· Can’t waive Guaranteed Issue and Community Rating
1332 Waivers:
· Allow full opt out – including GI and CR (or even better, make opt out the default and allow opt in)
Taxes
· Replace Cadillac Tax with cap on tax exclusion for employer-sponsored insurance
HSAs
· Allow unused tax credits to flow to HSAs (reversing the House amendment)
· Allow payments for Direct Primary Care (also in the Cassidy bill)
· Allow HSAs to be used with any type of insurance plan, not just high-deductible policies.
· Allow HSAs to be used as repositories for pooled contributions from public or private sources in order to assist lower income individuals to finance health insurance and medical care.
Safety Net
· Allow 25% of the unused tax credits to be provided to states in the form of Safety Net grants. This is already in legislative form in Sen. Cassidy’s bill in Section 132
Premium assistance
· Convert existing Medicaid and Children’s Health Insurance Program (CHIP) funding for able-bodied adults and children into a premium-support program so those beneficiaries can enroll in private health insurance plans—and thus be able to secure access to the same doctors and medical professionals as their fellow citizens. (Heritage)
