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January 27, 2014

Washington Health Policy Week in Review Archive 152b0384-98e2-4756-9c99-29bf8e3b4a95

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Administration Officials Say Marketplace Enrollment Tops 3 Million

By Rebecca Adams, CQ HealthBeat Associate Editor

January 24, 2014 -- The number of people who enrolled in state and federal marketplace plans has reached about 3 million, according to an announcement last week by Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner.

Obama administration officials touted the development as a milestone that was reached this week. CMS spokesman Aaron Albright said that he did not know exactly what day enrollments reached that number.

"As our outreach efforts kick into even higher gear, we anticipate these numbers will continue to grow, particularly as we reach even more uninsured young adults so that they know that new options and new ways to help eligible individuals pay for their premium are now available, thanks to the Affordable Care Act," said Tavenner in a blog post.

The administration and its supporters are busy courting young people through a national publicity campaign that includes a day of focused outreach on February 15.

The administration set aside $76 million for paid ads during the open-enrollment season, including $52 million from Jan. 1 to March 31, said Department of Health and Human Services spokeswoman Joanne Peters.

Administration officials said they did not have more details on enrollment, such as a demographic or state-by-state breakdown of the enrollment figures. The most recent report with that kind of information was released on Jan. 13.

That report showed that 2.2 million selected a plan between Oct. 1 and Dec. 28. Obama administration officials did not release an exact number of people who have signed up and selected a plan so far. The administration counts enrollments by the number of people who have selected a plan, but does not subtract people who have not yet paid a premium.

At least 125,000 of the sign-ups between the end of the year and mid-January appear to come from California, which released its own estimates earlier this week.

The administration's announcement that roughly 800,000 people signed up in the last few days of December and first three weeks of January suggests a slowdown from December, a month in which 1.8 million people signed up. The heavy December turnout included people trying to ensure they had coverage on Jan. 1. In some cases they were facing the prospect of losing coverage because their insurance policies were ending and they were seeking to avoid going without benefits.

Before the troubled launch of the coverage expansion, the Congressional Budget Office estimated that 7 million people would sign up by the end of open enrollment on March 31. Since then, a number of health policy experts have predicted that the administration would fall short of that figure.

However, administration officials have said that they expect a surge of sign-ups close to the end of March as the deadline nears. After that, people who want insurance through the new marketplaces will have to wait until the next open-enrollment period for another chance to enroll unless their personal situations change through events including the loss of coverage, a move to another state, marriage or divorce. The administration has proposed that the following open enrollment start on Nov. 15, 2014.

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Despite Red State Resistance, Health Law Supporters Foresee Medicaid Successes

By John Reichard and Rebecca Adams

January 24, 2014 -- Health law supporters are predicting long-term success in efforts to expand Medicaid to enroll millions more uninsured Americans, even in those states such as Texas whose governors are dead set against the overhaul.

"People really have to be willing to roll up their sleeves," says Ginny Goldman, an activist who has set her sights on Texas, perhaps the toughest nut to crack in the national fight over expanding Medicaid.

A recent decision by Utah's Republican governor, Gary R. Herbert, to pursue some form of Medicaid expansion this year gives hope to supporters of the law. The Democratic governor of conservative-leaning Kentucky said last week that 175,000 of his residents have signed up for Medicaid through an expanded version of the program or for health insurance through its health insurance exchange since Oct. 1.

A combination of factors could ease the path toward expansion in states whose leaders are opposed to the law. They include coalition building involving low-income residents, business interests, and hospitals and other health care providers. Branding the Medicaid expansion with a state's own imprint could allow Republican governors to claim economic benefits while maintaining their political opposition to the health law.

Goldman, director of a community organizing campaign for low-income Texans called the Texas Organizing Project, said at a recent Washington, D.C., conference that Texas is the state that has the most to gain from expanding Medicaid. Estimates are that 1.4 million to 1.7 million of its 6.4 million uninsured residents would get coverage if the state expanded Medicaid. Goldman spoke at the annual conference of Families USA, an advocacy group that backed enactment of the health law.

Other states, such as Washington, Kentucky, and California are reporting big enrollment numbers since they expanded eligibility for their programs on Jan. 1. Sorting out how many of those people actually are newly eligible is challenging—and it's clear that in a number of states many residents are not.

But in states like Texas, the number of newly eligible isn't in dispute. It's zero.

Pushing Back in Texas

In Texas "there's two challenges and their names are Ted Cruz and Rick Perry," quipped Goldman, referring to the state's junior senator and its governor.

"Immediately when Rick Perry first announced in 2012 that he was going to reject the Medicaid expansion money, we really sprung into action bringing uninsured families to the capital, having press conferences" and "really showing that people weren't just going to sit back and allow this decision to go forward without a fight," Goldman said.

Joining in the effort were Planned Parenthood, SEIU, other labor unions, "and more traditional partners" such as health providers, Goldman said. And there are "unusual partners" because the size of the uninsured population in Texas, she said.

"The Chamber of Commerce and Texas Organizing Project don't traditionally agree on many issues, but on this issue we're sitting at the table talking about the economic impacts that not accepting the Medicaid funds is having on the state, the number of jobs that are being lost," she said.

Goldman said there was bipartisan support in the legislature for a "Texas solution" that would make Medicaid expansion palatable in the state. Republicans and Democrats were ready to push forward some bills but Perry "slammed the door on that opportunity," she said. So Republican lawmakers "who were willing to go there with us had no reason to walk that plank," Goldman said.

"We measure success differently in our state," she said. Perry made the calculation that most people affected by the expansion probably wouldn't know about it or if they did find out about weren't going to vote or take any action, she said. "We counted it as a success that we communicated with over 400,000 Texans in 2013" about Medicaid expansion to counter that perception. She said 44,000 of them either pledged to take an action on behalf of expansion in 2014 or pledged to vote this year in upcoming elections.

Working uninsured Texans and home care workers were organized to "directly confront" Perry said. "They interrupted his state of the state speech," interrupted his press conferences, and forced him to meet with uninsured residents in his office in front of the press.

At the same time, Goldman wasn't forecasting a payoff any time soon. In states such as Texas, "I would say dig in, because it is going to be a long haul," Goldman said. "And then I would say look for the opportunities along the way" for smaller gains and local efforts that maintain momentum.

She said in Houston, for example, a "pay or play" effort is underway to require employers who don't provide coverage to pay into some kind of fund.

Utah: Doing Nothing 'Not an Option'

In Utah, "doing nothing is not an option," Herbert said last week.

The governor has not decided exactly what kind of approach to take, his spokesman, Nate McDonald, recently said. When the 45-day state legislative session begins this week, Herbert expects to begin work in earnest on figuring out the details.

"These questions you are asking are still being determined," McDonald told HealthBeat.

If the state decides to use a Section 1115 waiver to expand eligibility, it will have to be posted publicly so that the public can comment on it before the Centers for Medicare and Medicaid Services decides whether to approve it. A number of states are interested in using Medicaid dollars to buy coverage in the new marketplaces. CMS has already approved waivers in Arkansas and Iowa that pursue this approach. Government officials are currently reviewing a Pennsylvania request that follows this model.

Kentucky: Red State, Democratic Governor

Kentucky Democratic Gov. Steve Beshears said that 175,000 Kentucky residents have signed up for Medicaid through an expanded version of the program since Oct. 1 or through its exchange. Most are entering Medicaid, though he didn't break out the numbers and it wasn't certain that all those in Medicaid are newly eligible.

Beshears told the Families USA event that Kentucky is the only southern state to broaden the program and run its own exchange. Kentucky has been widely cited as a success story because of its lack of technical problems with its insurance website, its assertive outreach and its relatively high percentage of enrollments.

"Some might consider the commonwealth an odd choice to be leading the nation," Beshears said. He cited the stereotype of the state as behind the times and opposed to any growth in government.

"Classic red state persona, right? Wrong," he told the advocates.

Beshears was able to avoid some of the drama in other states because he took executive action to expand Medicaid and create a state-run marketplace. Bypassing the state legislature, he changed regulations to expand Medicaid and signed an executive order to put the state in charge of the exchange. Beshears has prevailed in court against challenges to the steps he took.

Kentucky's population has very poor health, he said, calling the state's statistics on disease and mortality "horrendous."

"I needed a big solution and along came the ACA and gave that big solution to me," he said, referring to the health care law (PL 111-148, PL 111-152).

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Ways and Means 'Doc Fix' Carries 10-Year Price Tag of $121 Billion, CBO Says

By Emily Ethridge, CQ Roll Call

January 24, 2014 -- The House Ways and Means Committee bill to replace Medicare's physician payment formula is the cheapest of three versions, with a price tag of $121.1 billion over 10 years, the Congressional Budget Office (CBO) recently reported.

The comparatively low cost will please provider groups who have been cheering lawmakers' recent progress in moving "doc fix" legislation to replace the sustainable growth rate formula (SGR). Three committees have approved bills to institute new payment formulas, and doctors want Congress to pass one of them in the first quarter of 2014.

In December, Congress passed a three-month payment patch (PL 113-67), staving off scheduled cuts in physicians' payments under the SGR until March 31. Lawmakers have not yet scheduled bringing any of the replacement bills to the House or Senate floor.

Cost is the biggest remaining obstacle in replacing the SGR, and lawmakers are still looking for ways to pay for the bills. The Ways and Means version of the bill (HR 2810) has the lowest cost, at $121.1 billion over 10 years, while the House Energy and Commerce Committee version of the measure would cost $153.2 billion over that time period.

A bill (S 1871) approved by the Senate Finance Committee would cost $148.6 billion over 10 years, according to the CBO. The CBO said the Ways and Means bill is cheaper than the Energy and Commerce measure because it includes lower annual updates to payment rates for physicians, and has lower costs associated with its Alternative Payment Model (APM) program.

Nearly all of the Ways and Means bill's costs come from its payment increases to physicians, the CBO said. The bill would increase payment rates for Medicare physicians by 0.5 percent in 2015 and another 0.5 percent in 2016. Payment rates would stay at the 2016 level through 2023. Those updates would increase spending by $118.4 billion between 2014 and 2023, according to the CBO.

The bill would create a value-based performance incentive program and an APM program, for physicians to get better payment adjustments. The CBO found that establishing those programs would increase spending by $5.5 billion through 2023.

"That estimate largely reflects CBO's expectation that each provider will choose the program that is most attractive financially to that provider," the CBO said.

In the value-based performance program, providers would get either bonuses or negative payment adjustments depending on how they performed. Those adjustments are designed to be offset across the pool of providers, so there is no net effect on overall payments.

Providers who participate in eligible APMs would receive a lump sum incentive payment equal to 5 percent of their Medicare payments from the previous year, from 2017 through 2022.

After 2023, Medicare would have two payment rates for services. Providers in the VBP program would get a 1 percent annual increase in payment rates, while providers in the APM program would get a 2 percent annual increase.

The CBO said the bill also has savings provisions, including requiring the development of Medicare payment codes to encourage care coordination and medical-home use. Those provisions would result in $2.8 billion in savings over 10 years, the CBO found.

The CBO estimate assumed that the Ways and Means bill, if passed, would maintain current payment rates for physicians through the rest of 2014.

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Medicaid Eligibility Determinations from State Agencies Up in December

By Rebecca Adams, CQ HealthBeat Associate Editor

January 22, 2014 -- Almost 2.3 million people were determined eligible for Medicaid or the Children's Health Insurance Program (CHIP) in December, in addition to the 1.7 million people in November. The report does not say how many of these people were eligible under Medicaid rules that go back years and how many benefit from new rules under the health care law expanding eligibility to more adults.

The data are from state agency data, some of which is incomplete. The report does not include any enrollments from applications submitted through, the federal website handling enrollment in 36 states. Most of the hundreds of thousands of potentially Medicaid-eligible people who applied through have not yet had their applications transferred to the states, so those people have not yet received their benefit cards unless they reapplied through their state agencies.

When you count the total number of people who have qualified so far for Medicaid or CHIP from October to December, the number from state agencies is 6.3 million. That doesn't mean that 6.3 million people suddenly became eligible for Medicaid because of the health care law (PL 111-148, PL 111-152). Some of those people are just renewing their coverage, or were previously eligible for benefits but hadn't applied before.

The number of applications sent in to states in December was 3,187,202 forms (representing one or more people), up from 2,119,870 in November. During the three months before open enrollment started on Oct. 1, the average number of applications was 2,272,962.

But those numbers are based on partial numbers from the states, with some states not reporting new applications and others not reporting their three-month averages from July to September.

Reporting numbers in Medicaid is difficult because states have collected the data in different ways. Some include people who are renewing coverage while others break it out. A few count the number of people who applied instead of the number of applications filed.

Sometimes states count determinations by the number of households who qualify for the program instead of the number of individuals who are eligible. In many states, the data are unofficial or incomplete.

"It's important to note that these numbers are a preliminary window into the changes in Medicaid enrollment late last year," said National Association of Medicaid Directors Executive Director Matt Salo in an email. "States and CMS are still sorting out Medicaid enrollment from people who applied directly to the FFM (federal marketplace). And what many people don't read far enough to learn is that this number also can include people in some states who are eligible under pre-expansion (woodwork effect), and whose Medicaid enrollment was simply renewed."

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Latino Engagement Needed to Boost California Exchange, Officials Say

By Kerry Young, Associate CQ HealthBeat Editor

January 22, 2014 -- More than 625,000 people have enrolled so far in insurance through California's health exchange, a figure that state officials intend to boost in the months ahead partly by reaching out more to Latinos.

"We're in the process of both fine-tuning the way we assess our enrollment demographics and, more importantly, building on our focus to ensure that more Latinos apply for and enroll in coverage," said Peter V. Lee, the executive director of Covered California, as the exchange is called.

"We have much work to do over the next three months to build on our outreach to this important population and help those who have applied complete the process."

Last week Lee released the enrollment figures as of Jan. 15, and discussed during a press briefing the strategy for attracting more people to participate in the exchange. The Fresno Bee then chided Covered California for what it called stumbles in the effort to reach out to Latinos, who are key to the success of the exchange.

"As a group, Latinos are younger and healthier than the general population. The state needs Latino enrollment to make the new insurance pool work as intended, with a mix of old and young, healthy and sick people," the paper said in an editorial.

The newspaper stressed the need for finding ways to connect with prospective customers of the exchange, even beyond recent efforts to move ahead with a Spanish-language website and advertising. These are "no substitutes for addressing the real issue, which is to connect with target communities in person," the paper said.

"Word of mouth from trusted sources matters more than ads, especially among people who never have had insurance and don't use the Internet," the editorial said.

Lee said that Covered California has designed bilingual ads to remind enrollees to pay their premiums, a reminder needed for all would-be participants in health plans arranged through the exchange.

"The level of interest is impressive, but consumers now need to take that crucial step of paying their plan so their health coverage can take effect," Lee said.

Anthem Blue Cross of California, Blue Shield of California, Kaiser Permanente, and Health Net were the plans most frequently picked, accounting for almost 96 percent of total enrollment.

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Rand: Renewal of Cancelled Policies Slightly Raises Marketplace Premiums

By Rebecca Adams, CQ HealthBeat Associate Editor

January 22, 2014 -- None of the three plans that were debated last fall to extend expiring insurance policies would make the health law's new insurance exchanges unworkable, said a study released last week by the Rand Corporation.

The plan that President Barack Obama announced in November to allow the extension of expiring insurance policies for an additional year has the mildest effect on the health of the marketplace when compared to two competing plans that lawmakers had proposed, the study added.

Obama announced the plan after intense public criticism that cancellation of policies for non-compliance with the health law violated his pledge that Americans could keep their existing coverage under the overhaul if they liked it. Obama announced that policies that would otherwise be cancelled because they do not meet the benefit requirements of the health care law could continue for another year if insurers and insurance commissioners agreed.

The House of Representatives at the time was preparing to pass a different, farther-reaching proposal, placing Obama under pressure. The day after Obama announced his plan the House passed a bill (HR 350) introduced by Energy and Commerce Committee Chairman Fred Upton, R-Mich. Upton's bill died in the Senate.

The Rand study compared the impact of those two plans with another (S 1642) put forward in the Senate by Mary L. Landrieu, D-La.

"None of the three proposals would lead to a death spiral," said the 20-page study.

Under the plan that was adopted, Obama's administrative fix, enrollment in the marketplaces will fall by about 4 percent, or 500,000 people. Premiums will rise about 1 percent more than they would have otherwise.

Landrieu's bill would have a slightly more negative impact - enrollment would have gone down by about 8.5 percent and premiums would have gone up about 2.5 percent.

Upton's bill would have been the most disruptive to the marketplace. Enrollment would have dropped 26 percent and premiums would have gone up by about 10 percent.

All three of the proposals would perpetuate the two different insurance markets for people who buy insurance on their own. People who do not qualify for subsidies in the marketplaces and are likely to find cheaper prices among individual policies sold outside of the marketplaces because the individuals are young and healthy may choose to get coverage outside of the marketplaces created by the federal law.

All three of the proposals would increase federal spending. The president's plan will drive up federal spending by about $600 million. If Landrieu's plan had been enacted, it would have increased federal costs by $1.1 billion and Upton's plan would have pushed up costs by $5.2 billion.

The higher spending comes about because of higher premiums and federal subsidies that increase as rates rise.

Also, young and healthy people cost less to insure. If fewer of them are in the marketplace, then the costs for everyone would rise. "In effect, this departing group acts as a second subsidizer, and the federal government must fill the void," said the report.

But the study concluded that under all three approaches the marketplaces would continue to operate without major problems.

The researchers pointed to several factors that would mitigate the impact of the proposals. First, subsidies are offered only in the marketplaces - that federal money will attract customers.

Temporary measures also will help lessen losses for insurers. The federal programs that provide reinsurance for high-cost cases and risk corridors that limit insurers' losses for three years will help. And "risk adjustment" mechanisms that transfer money from insurance plans with many healthy customers to those with many sick enrollees can encourage insurance companies hit by bad risks to keep offering coverage in the marketplaces.

The impact will vary in different states. But the researchers used an economic model to figure out that overall, the marketplaces would not be abandoned by so many customers they would cease to function.

"Although we observed premium increases and enrollment declines, the ACA-compliant market did not spiral out of control," said the report. "Instead, it converged to an equilibrium with higher premiums and lower Marketplace enrollment. Thus, our results indicate that a death spiral will not result from any of the proposed reforms."

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