Since last November’s election, the future of the Affordable Care Act (ACA) has been very much in doubt. It can be debated whether the health insurance exchanges (Exchanges) are in a “death spiral” as President Trump suggests, or only in need of policy tweaks — circumstances vary greatly state to state. Nonetheless, the continued uncertainty over the future of “Obamacare” and the payment of ACA subsidies in particular is another reason for health insurers to drop out of the Exchanges. At the time of this writing, there will be counties in Missouri, Ohio and Washington with no health insurers offering health plans through that state’s Exchange in 2018. More holes could open up in the coming weeks.
In the midst of this continued uncertainty, in the last week, two states moved aggressively to ensure that Exchange consumers have plan choices in their state’s market. Both assume that Exchanges will continue to be a sales distribution channel for individual market coverage. And both involve leveraging the state’s position in administering the Medicaid program.
On June 5, New York Governor Andrew Cuomo directed its Department of Health to create emergency regulations that would bar any health plan that leaves the state-based Exchange in plan year 2018 from participating as a managed care plan in certain government programs: Medicaid, Child Health Plus (CHIP), and the Essential Plan (Basic Health Plan). New York City has a healthy nine carriers participating in the Exchange, and no New York counties have less than two carriers. According to the state insurer trade association, no carriers have stated plans to exit the Exchange in 2018. This prompts a question of whether there is an “emergency” within the meaning of the state law.
Further complicating the state’s effort is the fact that the state Medicaid contracts with managed care plans are not set to expire until 2019. Opposed health insurers may argue that the state cannot change the terms of that contract in the middle of its term.
In addition, Governor Cuomo’s directive instructs the Department of Financial Services to finalize regulations that retain certain ACA consumer protections, no matter what happens with “repeal and replace” measures at the federal level.
On June 2, the Nevada Legislature, right before it adjourned, passed a bill (AB 374) that would allow consumers in the Exchange to buy into Medicaid with ACA premium tax credits, if they qualify for the subsidies. If enacted, the measure would take effect in plan year 2019.
Beyond this bill, Nevada has taken a unique approach to incent carriers to participate by awarding additional points in the state’s Medicaid managed care organization (MCO) Request for Proposals (RFP) evaluation if they commit to offering qualified health plans on the Exchange. This approach appears to have worked thus far: both Anthem and UnitedHealthcare participate as Medicaid MCOs and Exchange carriers.
The Nevada bill underscores the principal role states play in both regulating their private insurance markets and administering their Medicaid programs. Nevada already contracts with MCOs in operating its Medicaid program. Starting in 2019, one or more of these plans would be offered on the Exchange to individuals who don’t otherwise qualify for Medicaid, such as individuals with household income above 138 percent FPL. The state would require carriers offering such Medicaid “buy-in” plans to mirror the standard Medicaid fee-for-service benefit package, except that non-emergency medical transportation would be an optional benefit.
Governor Brian Sandoval (R) has not yet signaled whether he will sign or veto the bill. To formally institute this measure, the state Department of Health and Human Services would seek CMS approval of “any necessary waiver” (such as a Section 1115 or 1332 waiver) to implement such a proposal. The Trump administration is reported to be receptive to the Nevada proposal.
A National Trend?
The bold actions of New York and Nevada probably do not signal a national trend in the short run. Both are in the minority of states that run their own Exchange (though Nevada relies on the federal HealthCare.gov platform), so they have more control over their Exchange markets than most states. 2018 product filings are due this month (in some states the deadline has already occurred) and the market reform clock for 2018 has largely run out. But the Trump administration is committed to empowering states, and Medicaid and Exchange markets are more alike than different. Given this — and absent large Medicaid cuts that could trigger insurer exits from that market — more states may be tempted to link the Medicaid and Exchange markets, particularly if the federal government does not provide its own recipe for fixing Obamacare.