Bracing for an Uncertain 2018, States Can Apply the Flexibility and Innovation Learned in 2017
The federal political and funding uncertainties that affected state health insurance coverage in 2017, including the potential repeal of the Affordable Care Act (ACA), are expected to reverberate through 2018. But this year, state health care policymakers have some lessons learned about the value of state flexibility and innovation as they navigate another tumultuous year.
Last October, several sessions at the National Academy for State Health Policy’s (NASHP) Annual State Health Policy Conference focused on states’ efforts to improve or ensure coverage in an uncertain federal political environment. Officials, representing Medicaid agencies, insurance departments, health insurance marketplaces, and executive offices, from nine states* highlighted how their states were responding in the current, challenging policy environment and described their aspirations to improve coverage and health in their states.
Below, NASHP recaps the actions that conference speakers took in 2017 that can also be used in 2018.
States proactively took action to address urgent health care issues spurred by federal uncertainty.
State officials described having to analyze various scenarios involving significant changes to their health coverage and markets as a result of federal actions – or in some cases inaction. Although Congress recently provided long-term federal funding for the Children’s Health Insurance Program (CHIP), states faced several months of uncertainty after funding for the program expired in September 2017.
To mitigate potential coverage losses, Colorado developed detailed contingency plans to inform families and stakeholders early on about possible coverage changes in CHIP. Its Department of Health Care Policy & Financing also worked closely with the state’s health insurance marketplace to craft plans to seamlessly transition CHIP-enrolled children to marketplace coverage if that became necessary.
Uncertainty over the Trump administration’s payment of cost-sharing reductions (CSRs) each month, as well as questions about the future of the ACA, posed significant challenges for state insurance regulators who were concurrently negotiating rates with insurers for the 2018 coverage year. In this confusing environment, both regulators and insurers were required to commit to coverage offerings despite the lack of key information that would influence market composition and costs.
New Mexico invoked an existing state requirement that requires insurers who provide major medical coverage to offer at least one plan statewide to ensure that consumers – including those in rural areas — would have a choice of insurance products in 2018. In Massachusetts, insurance marketplace officials communicated regularly with insurance carriers and the state’s Division of Insurance to examine options, which allowed the state to quickly implement a plan to load CSR-adjusted rates into its silver-level marketplace plans, thus mitigating the effect of CSR losses once the administration finalized its decision to cease CSR payments in October 2017.
States across the country face similar challenges as they analyzed the effect that proposed administrative actions could have on their 2019 markets, including the proposed association health plan regulation, the pending regulation on short-term insurance plans, and the administration’s decisions affecting enforcement of the individual mandate—each of which could significantly impact the stability of state individual insurance markets.
States are adaptive and take action to address the needs of their coverage markets. Knowing their regulatory authority and market characteristics, state leaders often have the best perspective about the needs of their coverage programs. In 2017, several states used their flexibility and authority to design policies or initiate programs that safeguarded their citizens and markets. Alaska has long struggled with issues of cost and providing sufficient access to coverage, intensified by the state’s geographic composition and lack of access to providers. Faced with escalating premiums and the danger of issuer exits, Alaska took the lead as the first state to use 1332 waiver authority to create a reinsurance program. The program was structured as a two-year plan, giving the state time to develop a more sustainable solution to meet its market challenges. By taking this action, Alaska maintained the number of issuers participating in its individual market and reduced proposed premium increases. Several states, including Oregon, Washington, and Wisconsin, are exploring implementing similar reinsurance programs using 1332 waiver authority in 2018.
The resources states used to respond to federal uncertainty distracted them from achieving other health policy improvements. While federal action can be necessary to address significant health care system issues, state officials point out that large-scale federal reforms also distract states and prevent them from tackling other priorities or addressing needs of greater importance to their states. Several officials noted that the time and effort needed to develop new policies and educate legislators, constituents, and other stakeholders about the potential implications of federal changes required a significant expenditure of resources during 2017. This included dedicating considerable resources to conduct analyses of “the dramatic change” that could have resulted from any of the proposed federal actions debated in 2017, including repeal of the ACA, state officials explained. Instead, officials noted they could not focus on issues like addressing the underlying drivers of health care costs, exploration of value-based purchasing models, state-based strategies to increase insurer competition and choice while maintaining quality, and initiatives to reduce pharmacy costs.
States work to build or improve bridges across a coverage continuum. State officials at the conference addressed the effect that increases in coverage—spurred by Medicaid expansion and the availability of subsidized plans through the health insurance marketplaces—have had on their populations and coverage programs. Specifically, they noted that the changes have increasingly moved their programs toward creation of a nearly seamless system of coverage options. As a result, some officials are more actively engaged in how to align, coordinate, and better leverage their programs to improve efficiency, reduce consumer confusion, and increase the number of individuals who can access coverage.
While Idaho did not expand Medicaid, the state is now seeking federal approval for a proposal that would allow individuals with incomes below 100 percent of the federal poverty level (FPL) to purchase subsidized coverage on the marketplace, while also allowing individuals up to 400 percent FPL with complex health needs to qualify for Medicaid (for more details see, Searching for New Insurance Options, States Consider Medicaid Buy-In and Other Strategies).
Medicaid and insurance marketplace agencies in Washington, DC work closely to coordinate policy and manage cases of individuals transitioning between Medicaid and the marketplace. Washington, DC now has one of the lowest uninsured rates in the nation, and officials noted the importance of interagency coordination to resolve technical issues between programs and capture individuals who may otherwise lose coverage while navigating between programs. One official said, “the closer [our agencies] work on [policies], the more effective we can be.”
As state health officials plan for 2018, they will need to continue to be nimble to balance short-term, pressing issues while focusing on long-term, forward-focused plans that promote affordable and accessible coverage.
*States represented at the sessions included Alaska, Colorado, Washington, DC, Idaho, Massachusetts, New Mexico, Virginia, Washington, and West Virginia.