Donnelly Urges Market Stability on Health Care; Association Plans in the Offing?

Senator Joe Donnelly is urging the Trump administration to make a public commitment to continue cost sharing reduction (CSR) payments, which lower consumers’ deductibles and co-pays.

Early in the week, Donnelly continued his push for stability in the insurance markets in a letter to Hoosier Seema Verma – the administrator of the Centers for Medicare and Medicaid Services (CMS) – who he partnered with to help establish Indiana’s bipartisan Healthy Indiana Plan (HIP) 2.0 program through the Affordable Care Act. Donnelly’s letter comes as President Trump has declined to commit to continue making CSR payments. Donnelly says if these aren’t maintained, it could cause people to pay at least 15-20% more for health care.

In the letter to Verma, Donnelly wrote: “…It is our job to protect American families from unnecessary increases in the cost of health care, particularly those within our control. That is why I am very concerned by recent comments and actions made by the administration demonstrating a willingness and desire to undermine the health care system, even at the expense of the health and economic security of millions of Americans. These efforts to create uncertainty are harming working people and are already having a detrimental effect in Indiana.

“As we work to improve our health care system, we must first do no harm … The administration has the ability to help provide market stability today, and I respectfully request that the administration make a strong public commitment to continuing the CSR payments so that Congress can work together in a bipartisan fashion in an effort to reduce costs, expand access and strengthen the American health care system.”

Additionally, Donnelly said he’s recently heard from several insurance companies which provide coverage to Hoosiers – including two that have recently left the market – that cited lack of certainty, particularly as it relates to the CSR payments, as a key reason for increasing prices or leaving the market.

White House Press Secretary Sarah Huckabee Sanders said this week that CSR payments were, at this point, bailing out a failed law. She also said no final decision had been made by the President on continuing them.

Read Donnelly’s full letter to Verma.

Meanwhile, Sen. Rand Paul of Kentucky is making a case to President Trump to use his executive authority to permit associations and organizations to offer group health insurance plans. Paul says this could impact tens of millions currently in the individual marketplace. The White House has yet to comment on the possibility. This action would be very helpful to Indiana Chamber members and we have previously discussed this positive policy proposal with members of the Indiana delegation.

Chamber Analysis of Governor’s Request to Expand Healthy Indiana Plan

The Pence administration last week unveiled plans to request a waiver from the Centers for Medicare & Medicaid Services (CMS) to expand the Healthy Indiana Plan (HIP). This expansion of HIP would be in lieu of a traditional Medicaid expansion. The announcement had been anticipated for several weeks.

The Healthy Indiana Plan, or HIP 2.0 as it is now being referred to, will have three “pathways” to coverage: HIP Basic, HIP Plus and HIP Employer Benefit Link. It is funded through the existing cigarette tax, the hospital assessment fee and federal Medicaid funds.

The Basic HIP plan is for Hoosiers below 100% of the federal poverty level (FPL). Basic members use an entirely state funded power account (similar to a health savings account) to cover a $2,500 annual deductible. The HIP Plus plan is for Hoosiers under 138% of FPL. They will be required to make contributions that range from $3-$25 per month. Members of HIP Plus and the state will jointly fund the power account based on a sliding income scale. This plan also includes dental and vision coverage.The HIP Employer Benefit Link allows HIP eligible individuals to enroll in either HIP Plus or receive a defined contribution power account funded by the state to access an employer-sponsored program. The defined contribution must be used to pay for premiums, co-pays or deductibles.

The Indiana Chamber has supported the expansion of HIP as an alternative to a traditional Medicaid expansion. The HIP plan has encouraged individual responsibility by attempting to mirror consumer driven health plans. HIP also reimburses at 100% of Medicare (higher than Medicaid), which ensures more provider participation and reduces cost shifting to the private sector, a point that is important to employers. The Indiana Chamber believes that the HIP Employer Benefit Link option will be an interesting program to potentially provide coverage to Indiana’s working poor. The Indiana Chamber will be securing more details on how the program will be implemented and will provide our members that information as it is received.

On a related note, this $25 million budget savings to the state – if the HIP expansion is approved by CMS – could cause some problems for insurance carriers providing health insurance coverage to the individual market in the insurance exchange/marketplace. The state is transitioning from a (209b) state, with its own disability definition, to what is called a “1634” state. Under a 1634 state, the administration will accept disability definitions of the Social Security Administration. As a result of the switch, the state will no longer be required to maintain a spend-down program. This program allowed those with high medical expenses to become eligible for Medicaid after they spent a designated portion of their monthly income on medical expenses. As of December 2013, there were over 134,000 people in this spend-down program.

Of that spend-down population, nearly 7,500 have incomes over 100% of FPL. It is this population that will be transferred to the insurance exchange/marketplace to purchase qualified plans in the commercial market. Medicaid claims for those individuals have been over $1,800 per member per month. Total claims for March 2013 through March of 2014 were $134 million. That amount is significantly higher than under normal individual insurance plans.

Insurance carriers participating in the insurance exchange filed their rates in May of last year. Those rates included calculations for the high risk pool being transitioned into the exchange, but the 7,500 “1634” transition eligibles are not included in those rates. This has serious impacts on those carriers: Significant losses to those participating which will result in considerable increases in current rates to cover the cost; those carriers that waited and will be coming into the exchange in 2015 have an advantage over those current participants in that they are taking on none of this additional risk; and for the smaller carriers there is a concern whether they will be able to participate in the exchange in the future, thus potentially jeopardizing Hoosier choices.

The Indiana Chamber will continue to evaluate and comment on this issue as more information is available.