After the furor and failure of the Republican effort to repeal the Affordable Care Act (ACA), an alternative conservative strategy emerged that would allow states to design and run their own health care programs for the individual insurance market and the Medicaid program. Congress could then focus on legislative matters of greater importance, reduce administrative responsibility, and transfer the issue of health care delivery and management to the states. This is being accomplished in two principal ways: Executive order and regulation (at federal and state levels) and through U.S. Department of Health and Human Services (HHS) 1115 Waivers. Greater state flexibility in the provision of health care services can be positive, as evidenced in the State of Maryland’s use of “smarter planning” which is achieving savings and increased efficiency. However, there will also be turmoil and problems as health care delivery shifts from a centralized model such as the ACA, to state management, both positively and negatively. The new steward of HHS, Secretary Alex Azar, appears to be a knowledgeable, serious appointee who is focused on developing big changes, which would be a positive development. This is an evolving process and there are political headwinds and logistical hurdles.
Medicaid is at the forefront of change for states that initially refused to expand. These states are aggressively pursuing 1115 waivers and regulatory changes to re-design health care benefits and eligibility requirements that involve significant changes in Medicaid policy. The prize? Federal funding for local health care service for the poor and disabled and greater control over who is eligible for Medicaid and what is required for eligibility – long a Republican sticking point. State waivers were originally designed under the ACA for research and demonstration purposes, however, the Trump administration is allowing greater experimentation by states both for Medicaid and the individual health care market. There is much that can be learned from state Medicaid experiments, but only if they are fairly evaluated. The waivers are also being employed to develop lower-cost, lower-benefit plans for the individual health insurance market that will test the constitutional limits of federal health insurance requirements. New concepts are emerging from new types of providers, corporate experiments and membership concepts through religious organizations and others.
Kentucky was the first state to request and receive a Medicaid waiver, launching a significant overhaul of traditional Medicaid policy and benefits. Changes included: work requirements (euphemistically called Community Engagement Requirements), changes to dental and vision benefits tied to “My Rewards Points,” premium payment requirements, deductibles, and elimination of retroactive eligibility. Re-enrollment for eligibility requires extensive paperwork by Medicaid recipients, and missed enrollment deadlines or incorrectly executed paperwork can result in penalties, including loss of coverage. Health care analysts predict that difficulty in meeting compliance requirements will be a major predictor of loss of coverage eligibility and several lawsuits have been filed. Kaiser Health Foundation estimates Kentucky enrollment could decline by year five in excess of one million persons. Where will these people turn for health services if they lose Medicaid coverage? EMTALA (Emergency Medical Treatment and Labor Act) is a safety net for the indigent, but health care providers will aggressively seek payment for cost of services as EMTALA does not reimburse for indigent care burdening hospitals and patients alike. A recent uproar occurred when Tennessee announced their plan to use Medicaid dollars to pay for the more expensive administrative costs for development and supervision of their new eligibility requirements which would result in fewer people being served. Predictably, Republicans are pushing work requirements for Medicaid eligibility in other states but they are having mixed results. Arkansas, Idaho, Indiana, and Iowa jumped on the Medicaid waiver train after Kentucky launched its program. Significantly, governors of states that receive federal approval via the 1115 health waiver plan are able to implement approved changes by executive order without legislative approval. Still, not all governors are embracing Medicaid expansion. Maine is the first state to approve Medicaid expansion by popular referendum, over the strong objection of Governor Paul LePage.
Individual health plans offer the second major area for potential change. In the traditional health insurance market, BlueCrossBlueShield (BCBS) proposed lower cost, basic coverage plans in Idaho which did not include all of the federally required Essential Health Benefits. These plans, entitled “Freedom Blue;” are a return to health insurance of yesteryear, when cost caps, medical underwriting, exclusions, and bare-bones coverage were common. They are also more affordable and will compete directly with ACA marketplace plans for subscribers. Lower premiums (achieved through lower benefits), will drain younger, healthier persons from ACA marketplace plans leaving sicker persons in the ACA plans with inevitable premium increases. A legal challenge to Idaho’s Freedom Blue plans resulted in denial of approval by HHS Secretary Azar for non-compliance with federal benefit requirements. However, HHS offered a “work-around” that will allow them to offer lower-cost health insurance plans that “skirt” coverage of the ACA Ten Essential Health Benefits but are in effect for shorter time periods. There is great concern that many people will leave the ACA marketplace plans for premium savings and experience unexpected health expenses as well as further erode the stability of the ACA.
Big businesses are exploring changes through self-insurance. Leading the way are Amazon, Berkshire-Hathaway, and J.P. Morgan-Chase, who are teaming up to test a new concept in self-insured plans that removes profit, utilizes enhanced technology, and applies better management. Their goal is to offer their employees affordable, quality health coverage while cutting costs for their businesses. Their experiment will be watched closely by other large employers. Amazon’s Jeff Bezos plans to take the health care experiment a step further by entering the prescription drug provider market, medical equipment provision, and other areas that fall within health care delivery. Amazon already has the technology, warehouse distribution system, customer base, and negotiating strategy to move into direct competition with major pharmaceutical providers.
One of the more unusual concepts in the individual healthcare arena are religious health care memberships. Organized by and for their members, they are not legally “insurance providers;“ rather, they are a social contract between members. These health care memberships are exempt from regulations that apply to traditional health insurers which should raise alarm, but other providers are rushing in to copy the concept in order to compete for marketshare. Pre-existing exclusions, lifetime reimbursement caps, narrow benefits and religious restrictions are common as are lower premiums and more limited coverage. Health insurance has always been tightly regulated to protect consumers. Expect turmoil and litigation if this concept expands as a competitive force in health care.
As America continues to de-centralize health care delivery in stark contrast to other industrialized nations, its citizens and residents will experience increased volatility in cost, coverage, and access. A recent Kaiser survey finds that six in ten people favor a national health care plan, which is in direct opposition to the state management model being implemented by Congress. In the current period of health care policy uncertainty, more deaths will occur from treatable health problems and more people will be uninsured or under-insured. Costs will rise disproportionately for the elderly, disabled, and those with chronic illnesses, which begs the question: How has dismantling the ACA made health care better? Healthcare is a major concern of the American people, as evidenced by exit polling following the recent Pennsylvania election, where voters stated health care was the dominant factor in their voting decisions – across party lines. In a country that has struggled to find agreement as to what health care should consist of and who should design and direct it, the sheer number of changes that are emerging are certain to present many challenges. For too many years, health care in America has been under attack; people’s lives have been adversely impacted; and high insurance, medical cost and coverage uncertainty, are wide-spread. These new insurance experiments will shift more health care management to the states and will create a maze of inconsistent health care requirements and policy from state to state. There is no way that the delivery and quality of health care will not suffer. Who knows? It may even make Republicans wish they had worked with Democrats to fix the ACA!