No Easy Choices: 5 Options to Respond to Per Capita Caps

Congress is debating the American Health Care Act (AHCA) that would end the enhanced matching funds for the ACA Medicaid expansion and would also end the program-wide guarantee for federal Medicaid matching dollars by setting a limit on federal funding through a block grant or per capita cap.  Under a block grant, federal spending would be limited to a pre-set amount.  States could cap enrollment or impose waiting lists as mechanisms to control costs.  Under a per capita cap, per enrollee spending would be capped, but the total amount of federal dollars to states could vary with enrollment changes and states would not be able to impose enrollment caps.

Faced with restrictions in federal financing, states would have to make hard choices. Research shows that there is not strong evidence to support large savings through options aimed at achieving Medicaid efficiencies. Under a block grant, states could cap or limit enrollment; however, the incentives and options under a per capita cap could be different.  This brief outlines the key measures states could use to manage their budgets and the associated challenges under a per capita cap:

Kaiser Health Tracking Poll – June 2017: ACA, Replacement Plan, and Medicaid

  • As the Senate prepares to hold a vote on a plan to repeal and replace the Affordable Care Act (ACA), a majority of Americans say they have an unfavorable view of the plan (55 percent) while three in ten have a favorable view. In the past month, support for the replacement plan has decreased among Republicans (from 67 percent in May to 56 percent currently) and among supporters of President Trump (from 69 percent to 55 percent).
  • Over the past year, Kaiser Health Tracking Polls have found a modest increase in support for the ACA and this month’s poll finds about half of the public (51 percent) expressing favorable views of the ACA while 41 percent hold an unfavorable view. This is the first month that favorability has tipped over the 50 percent mark since Kaiser Family Foundation began tracking attitudes on the law in 2010 and continues the trend found last month with the public more favorable towards the ACA than the replacement plan (51 percent vs. 30 percent).
  • Large shares of the public overall, and majorities across parties, support the federal government’s role in prohibiting health insurance companies from charging individuals with pre-existing conditions more for their coverage and requiring health plans to cover a certain set of benefits, while fewer would want to turn these decisions over to the states.
  • Few Americans, regardless of party identification, say repealing and replacing the 2010 Affordable Care Act should be the “most important priority” for President Trump and Republicans in Congress (7 percent of Democrats, 9 percent of independents, and 8 percent of Republicans). Another two in ten (22 percent) say it is “very important but not the most important” priority. Republicans are much more likely to see repealing the ACA as a very important or top priority (50 percent) than Democrats (18 percent) or independents (28 percent).
  • The majority of the public – regardless of partisanship – hold favorable views of Medicaid, the government health insurance and long-term care program for low-income adults and children. Three-fourths (74 percent) of the public say they have a favorable view of the program, including four in ten (37 percent) who have a “very favorable” view. In addition, six in ten say the program is working well for most low-income people nationally (61 percent) and seven in ten say the program is working well for most low-income people in their state (67 percent).
  • When asked about proposed changes to the Medicaid program, a majority of the public support allowing states to impose work requirements on non-disabled adults (70 percent) or drug testing as a condition of enrollment (64 percent). However, fewer support changes that would cut funding or alter the funding structure. For example, about one-third support reducing funding for Medicaid expansion or limiting how much money each state gets from the federal government each year.
  • The public is more likely to blame health insurance companies rather than the actions of the current or previous administration for insurers deciding not to sell insurance in certain ACA marketplaces. About four in ten (42 percent) say the problems are mainly due to profit-driven decisions by health insurance companies while fewer say the problems are due to either the way the law was designed by the Obama administration and Democrats in Congress (28 percent) or uncertainty brought on by the actions of President Trump and Republicans in Congress (22 percent).

Conflicts of interest in health care journalism: VIDEO with our publisher about “an unhealthy state of things” (Part 3 of 3)

In the past two days, we’ve outlined a number of concerns about news organizations, professional journalism organizations and academic institutions that are involved in health care journalism reporting or training while accepting sponsorship or funding from health care industry entities that are often subjects of what the journalists or trainees do or will write about. (Part one of series. Part two.) These practices may be good for corporate, organizational or academic institution coffers, but the sponsorship comes at a price – of potential damage to journalism’s integrity and to the public trust in journalism, news reports and news organizations.

We have touched on examples of our concerns involving:

  • The World Conference of Science Journalists
  • The Association of Health Care Journalists
  • The University of Colorado
  • The University of Kansas
  • The National Press Foundation
  • NPR, STAT,

Ben Bagdikian, journalist/educator/media critic, wrote to and about journalists:

“Never forget that your obligation is to the people. It is not, at heart, to those who pay you, or to your editor, or to your sources, or to your friends, or to the advancement of your career. It is to the public.”

In this final part of our three-part series, I talk about some of these issues in more depth, and from the perspective of my growing concerns over a 44-year career in health care journalism.

The Republicans’ Jekyll-and-Hyde Health Care Plan

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The Senate Republicans’ health bill that was made public today is a Jekyll-and-Hyde plan: in some ways kinder than the House Republican plan, and in some ways meaner, to use President Donald Trump’s yardstick. Overall the plan will benefit the wealthy and young adults, but hurt larger numbers of people who are old or poor.

On Medicaid, the federal-state health program covering 69 million lower-income people, the Senate plan is harsher than the House plan. Like the House bill, the Senate bill would effectively kill the expansion of Medicaid that was allowed under the Affordable Care Act. It will do this by phasing out, over four years, the law’s requirement that the federal government cover 90 percent of the cost for people added under Medicaid expansion — many of them single adults below or just above the poverty line. Medicaid expansion covers 14 million people in 30 states and the District of Columbia. (The remaining states chose not to expand their programs.) Expansion states would have to come up with hundreds of millions, in some states billions, of dollars from their own budgets to replace those lost federal funds. Based on my experience as a state human services commissioner — for a Republican governor — I predict that few if any states will be able to do that. It is also highly unlikely that other states will join the expansion once the federal match is gone.

Both the Senate and the House plans also impose a per capita cap on future federal Medicaid spending. The Senate plan imposes a harsher formula for its cap than the House plan, which already cuts Medicaid spending by $834 billion over 10 years. Because states have to balance their budgets every year, unlike the federal government, many will struggle to compensate for reductions in federal aid caused by a spending cap. Many states will be forced to choose between Medicaid and other priorities, like education, law enforcement and prisons. The inevitable result will be a reduction in health care spending on low-income people. And you cannot cut over $800 billion from Medicaid without adversely affecting health services for the poor.

Governors might be expected to loudly protest these Medicaid cuts, but the Senate bill delays the harshest cuts until 2025, after the current governors are gone. We will see how those governors balance their states’ health care futures and their own political interests.

That’s Mr. Hyde. Now for Dr. Jekyll. The part of the Senate bill that deals with the individual insurance market and the A.C.A. marketplaces is in some respects Obamacare-lite. The House bill was sharply criticized for replacing Obamacare’s system of tax credits and subsidies, intended to make insurance more affordable, with a system of tax credits that were far less generous. The Senate bill would maintain Obamacare’s tax credit system, but it would scale back the value of the credits. And as under the A.C.A. but not the House plan, the tax credits will be adjusted for income and geography — which will benefit people in parts of the country with high premiums, especially rural areas. Still, deductibles are likely to rise under the Senate plan.

Another key difference involves community rating, which prohibits insurance companies from charging sick people more than healthy people. The House bill would authorize states to apply for waivers allowing insurers to charge sick people more. The Senate bill would not allow such waivers. But it would make it easier for states to seek exemptions from other provisions of the law, including the essential benefits insurers must cover, such as maternity care and mental health. How this would play out nationally would vary greatly from state to state, but it seems certain that some states would allow significant reductions in essential benefits.

Each of the plans would eliminate funding for Planned Parenthood for one year, as well as prevent plans participating in the insurance marketplaces from providing abortions.

Conservatives may like the idea of capping and cutting Medicaid, but they will not like the Senate bill’s Obamacare-lite tax credits. Liberals and moderates will resist what they consider the near decimation of the Medicaid program. Nor will they like the idea of handing so much control over Medicaid to the states. They will see little logic in reducing eligibility for the A.C.A.’s tax credits. How, they will rightly ask, would that “fix Obamacare” when middle-class consumers who buy their own insurance are struggling to pay their bills now?

Overall, it’s important not to focus too much on the differences between the Senate and House plans. Both plans will reduce federal health care spending and cap Medicaid while shifting greater responsibility to the states. And both plans will cause more Americans to go without coverage and struggle with health care bills. Both bills are likely to increase the number of Americans having problems paying medical bills — about a quarter of the public today. For voters, that is the single most important barometer of the performance of the health care system.

If the plan passes and is signed into law, congressional Republicans and the president will win plaudits from their base for repealing Obamacare. But then they will own the problems in the health care system, including those created by their own legislation.