DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop N2-20-16 Baltimore, Maryland 21244-1850 CE HRS FORMEDICARE& : MEDICAIOSERVICES Office of Strategic Operations and Regulatory Affairs/Freedom of Information Group Refer to: Control Number 091920177081 and PIN 9B3U 9/12/2018 Austin R. Evers American Oversight 1030 15th Street NW, Suite B255 Washington, DC 20005 Dear Mr. Evers: This letter is in response to your Freedom of Information Act (5 U.S.C. §552) request of 8/17/2017, which you sent to the Centers for Medicare & Medicaid Services. Within your correspondence, you requested correspondence with Dennis Smith of Arkansas Department of Health. We are also including 3 pages for request 012320187043 and one page for request 091920177095. After careful review of the documents submitted to me, a total of eighty one pages, I have determined to release them to you, as enclosed. Sixty-eight pages are released to you in their entirety. However, I am denying you access to portions of nine pages pursuant to Exemption 6 of the FOIA (5 U.S.C. §552(b)(6)). Exemption 6 of the FOIA permits a Federal agency to withhold information contained in personnel and medical files and similar files the disclosure of which would “constitute a clearly unwarranted invasion of personal privacy.” I have weighed the public interest in disclosure (which the Supreme Court has held to be limited in this context to the public interest that would be served by shedding light in the agency’s performance of its statutory duties) against the harm to the privacy of the individuals identified in these records and have concluded that the privacy interest of the subject individuals outweighs the public interest in disclosure in this particular matter. If you believe that the information withheld should not be exempt from disclosure, or this response constitutes an adverse determination, you may appeal. By filing an appeal, you preserve your rights under FOIA and give the agency a chance to review and reconsider your request and the agency’s decision. Your appeal must be mailed within 90 days from the date of receipt of this letter, to: Principal Deputy Administrator Centers for Medicare and Medicaid Services Room C5-16-03 7500 Security Blvd. Baltimore, Maryland 21244-1850 Please clearly mark both the envelope and your letter “Freedom of Information Act Appeal.” If you would like to discuss our response before filing an appeal to attempt to resolve your dispute without going through the appeals process, you may contact James Olin OR the CMS FOIA Public Liaison for assistance at: Joseph Tripline CMS FOIA Public Liaison Centers for Medicare & Medicaid Services 7500 Security Blvd., MS N2-20-16 Baltimore, Maryland 21244-1850 Telephone: (410) 786-5353 fax (443)-380-7260 If you are unable to resolve your FOIA dispute through our CMS FOIA Public Liaison, the Office of Government Information Services (OGIS), the Federal FOIA Ombudsman’s office, offers mediation services to help resolve disputes between FOIA requesters and Federal agencies. The contact information for OGIS is: Office of Government Information Services National Archives and Records Administration 8601 Adelphi Road–OGIS College Park, MD 20740-6001 Telephone: 202-741-5770 Toll-Free: 1-877-684-6448 E-mail: ogis@nara.gov Fax: 202-741-5769 Sincerely yours, Hugh Gilmore Director Freedom of Information Group Enclosure The Rubik’s Cube of the American Health Insurance System The glaring flaws of the Affordable Care Act (ACA) lie in the federalization of the health insurance system, a task for which the federal government had questionable authority and no real experience. There is no national health insurance market. There are multiple markets organized around public programs and private markets that are state and local. People, not the federal government, decide for themselves what is affordable and what they value. Opposition to the ACA is rooted in the coercive environment it created. It strained relationships between citizens and its servant, the federal government, and between the federal government and the states. Future efforts should focus on the return of authority and responsibilities to the states. Individuals and states must have the resources necessary to participate in the insurance system. A viable market also requires an engaged purchaser who values the product enough to share in the cost in a meaningful way. As typically understood, health insurance serves two major purposes—to gain access to necessary care and to protect against unforeseen and unpredictable financial losses. For people at lower income levels, however, there is a third purpose—it can be a pathway to economic independence if properly designed. Assisting individuals to move out of poverty due to increased earnings benefits everyone. However, if the AHCA is not constructed correctly, it could continue to keep people on Medicaid and out of the workforce. That would be the polar opposite of what good policy should seek to achieve. The health insurance system in the US can be described as a type of “Rubik’s Cube” comprised of six different but interrelated markets. How one side of the cube or even one row is changed affects another. The ACA scrambled the health insurance system, but by no means did it solve it. The disruption in the health insurance system continues to reverberate. While stabilizing the market in the short term, no more than 2 years, is essential, how the system will work after that period is of greater importance. Over half of Americans, about 174 million people, receive coverage through their employers. However, there are significant differences in whether coverage is available and in the way coverage is purchased based on the size of the employer. Thus, side one is the large group employer sponsored insurance (ESI) market and side two is the small group ESI market. The advent of the ACA resulted in some erosion in the small group ESI market as was witnessed after the creation of the Children’s Health Insurance Program (CHIP) 20 years ago (see Chart 1). People will naturally pursue economic incentives that are more favorable than their current condition. Medicaid and the Children’s Health Insurance Program (CHIP) market which cover about 85 million people are on side three; side four is Medicare which covers about 56 million people; side five is the individual market, covering 26 million people including those receiving federal subsidies to cover at least some of the costs for their premiums and cost sharing; and side six is the 28 million who remain “self insured. 1” This group on side six includes people who can afford coverage but choose not to purchase it as well as those for whom coverage is not affordable because they have low-incomes. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/NationalHealthAccountsProjected.html Table 17 1 1 HHS-CMS-17-0318-A-000001 The group on side six includes people who can afford coverage but choose not to purchase it and those for whom coverage is not affordable because they have low-incomes. In 2013, the percentage of adults aged 18-64 who were uninsured and poor (below 100% FPL) was 40%. But even though they did not have insurance, two-thirds of adults ages 18-64 in poverty reported had a “usual place to go for medical care” in 2013. Just 16.8% reported they did not obtain needed medical care due to cost. Similarly, 37.8% of the “near poor” (those with income between 100 and 200% FPL) were uninsured in 2013. But 71.1% reported a usual place to go for medical care and 14.6% reported they did not obtain needed medical care due to cost at some time in the past 12 months. By 2015, those uninsured poor adults fell to 26.2% and those who reported they did not obtain needed medical care declined to 12.4%. The percentage of uninsured near poor adults fell to 23.9% and those who reported they did not obtain needed medical care declined to 11.0%. By comparison, the percentage of not uninsured poor adults fell from 11.7% to 7.7% between 2013 and 2015. 2 In other words, of those who were uninsured with income up to 200% FPL, roughly half reported that cost was a barrier to receiving care. These interrelated parts of the cube should be viewed as a single system rather than separate, isolated programs. More specifically, Medicaid, CHIP, the individual market, and the uninsured are particularly intertwined. The movement between the sides of the cube can be observed with the creation of CHIP 20 years ago. As Chart 1 illustrates, 55% of near poor children (family income 100-200% of poverty, the target group for CHIP) had private insurance; 24.3% had public coverage and 22.8% were uninsured in 1997. 3 Over time, the percentage of near poor children with private insurance declined and the percentage of near poor children with public insurance increased as the percentage of near poor children dropped. In 2003, the lines crossed and the percentage of near poor children with public coverage exceeded the percentage with private insurance. By 2012, only 31.1% of near poor children had private coverage and 61.2% had public coverage and 9.7% were uninsured. https://www.cdc.gov/nchs/products/databriefs/db262.htm https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201212.pdf Tables 5 and 6. 2 3 2 HHS-CMS-17-0318-A-000002 CHART 1 -- PERCENTAGE OF NEAR POOR PERSONS BY COVERAGE UNDER AGE 18 70 60 so "' z 0 lQ .... CL. ... 0 40 I- z.... I.I ~ Public Plan CL. -+- Private Insurance ..._ Uninsured .... 0: 30 20 10 0 1997 1999 2001 2003 2005 2007 2009 2011 Source: CDC/NCHS, National Health Interview Survey, 2012, Family Core Component CHIP and the ACA are evidence, as if any were really needed, to support the well-established principle that individuals, acting in their self-interest, will pursue the option most favorable to them. While the health insurance system is particularly sensitive in the way it relies on younger, healthier individuals to participate in order to lower premiums for those who are older and thereby use more services, it is by no means the only industry that depends on attracting people of all ages. There are numerous examples of other industries that attract people of all income levels and age groups by offering a wide array of choices. Millions of the young, healthy lives needed to stabilize premiums in the individual market are ensconced in the Medicaid and CHIP programs. If the benefits and subsidies in the 3 HHS-CMS-17-0318-A-000003 individual market are not sufficient to make coverage in the individual market attractive, then people will stay on Medicaid. Many people stay on Medicaid because they may not know there is a viable alternative and it is better than private insurance in many respects. That is a rational decision for an individual or family to make, so the flaw is in the design which makes one program more attractive than another. A better approach is to add more people, rather than extra taxpayer dollars, to the nongroup insurance pool to lower premiums for everyone. The Rubik’s Cube of the American Health Insurance System may not be able to be solved, but it can be brought into closer alignment with a few major and minor twists from how it is currently configured: 1. There are about 45 million children on Medicaid and CHIP and 27 million adults on Medicaid. Moving only the nonelderly, nondisabled adults and children currently served in Medicaid and CHIP who have income above 100% of poverty would increase the number of young, healthy lives in the nongroup market by more than 50 percent. Federal funding under these programs would follow the people. 2. The House bill provides greater subsidies based on age which is reasonable from an insurance carrier perspective. The House bill also pursued an approach that tries to stabilize the individual insurance market by creating new rules for insurance companies and directing even greater taxpayer dollars, in excess of $130 billion through new programs, to insurance companies in hopes of preventing them from leaving the market. These new funds should be used instead to increase premium subsidies to people below 200% of poverty rather than prop up insurance carriers. 3. A functional market requires competition and informed consumers. Competition calls for deregulation and greater product diversity. The ACA was not the first federal intrusion into the market. Nondiscrimination rules (which actually allows for discrimination if within federal parameters) can be traced back to Kennedy-Kassabaum in the 1990s. But the federal role should be reduced. Much of the rate review process, for example, is duplicative and the federal review after state review results in few changes. 4. The way people currently shop masks the actual cost of the insurance product. Change the way subsidies are set and the selection process so individuals know how much their premium subsidy amount is worth first then let them shop for the best coverage that meets their needs for that level of funding. Set age-adjusted premiums as the House does, expressed as a federal contribution as a percentage of the premium rather than an percentage of an individual’s income. For a family, fix the “family glitch” and place an aggregate family cap on premiums. 5. Let people shop wherever they want. Federal funding to individuals and to states for those who remain in Medicaid should be equitable with the nongroup market to ensure states have adequate resources. Medicaid spending and tax subsidies can be a useful comparison for policymakers, for example, to assess whether tax subsidies for the population with income less than 200% FPL will be sufficient. The tables that follow have been constructed from recently published MACPAC stats (using 2013 data) might be useful in making that assessment. 4 HHS-CMS-17-0318-A-000004 Table 1 and Table 2 suggest that, while there is no national market, analyzing spending among states in the same federal HHS region tends to reduce variation. 4 It is also important to remember that the Medicaid population pays little or no cost sharing The state-by-state rankings in Tables 3 and 4 might be surprising based on what policymakers typically hear about Medicaid: that the match rate distorts payments, “liberal states” are more generous than “conservative” states so payments are much higher in “liberal states,” etc. The data shows there are state differences, but volume matters as a course of economics as does competition. A further note to the Medicaid data below—some but not all “supplemental payments” have been allocated among the eligibility groups. All types of supplemental payments, payments under the Disproportionate Share Hospital (DSH), low-income subsidy pools, and other special payments exceed $50 billion annually. Over the past few years, several Medicaid expansion states and non-expansion states have been permitted to tap additional federal funding for their programs. For those children and adults who remain in Medicaid, the Senate should look back 20 years to the last time there was bipartisan support for major healthcare reform--the creation of the CHIP program. There were features of that agreement that could be adopted today. These include: • • • • State authority and flexibility in service delivery Five benchmark plan options, including an option based on actuarial value, for benefits would replace “mandatory” and “optional” services Capped allotments that would guarantee a predictable level of federal funding but eliminate the financial morass of supplemental payments that cause tensions and jealousies among the states a financial Maintenance-of-Effort (MOE) could replace enhanced match rates The Rubik’s Cube of the American Health Insurance System may not be able to be solved, but it can be brought into closer alignment. The 10 HHS regions are organized for a variety of reasons including political considerations. To review the states within each region, please see: https://www.hhs.gov/about/agencies/iea/regional-offices/. 4 5 HHS-CMS-17-0318-A-000005 Tables 1 & 2 -- Medicaid Benefit Spending Per Enrollee by Federal Region and Eligibility Group Federal Region 01* 02 03 04 05 06 07** 08 09 10*** Federal Region 01* 02 03 04 05 06 07** 08 09 10*** Average of All Sum of All Child Average of All Child Enrollees Enrollees Child Enrollees per Month $ $ $ $ $ $ $ $ $ $ 14,513 5,711 19,683 20,247 15,378 12,090 13,765 19,001 10,635 11,258 $ $ $ $ $ $ $ $ $ $ 3,628 2,856 3,280 2,892 2,563 3,023 3,441 3,167 2,659 3,753 $ $ $ $ $ $ $ $ $ $ 302 238 273 241 214 252 287 264 222 313 Average of All Sum of All Average of All Adult Enrollees Adult Enrollees Adult Enrollees per Month $ $ $ $ $ $ $ $ $ $ 20,565 11,726 31,822 38,060 26,852 18,228 16,818 37,072 15,910 21,384 $ $ $ $ $ $ $ $ $ $ 5,141 5,863 5,304 5,437 4,475 4,557 4,204 6,179 3,978 7,128 $ $ $ $ $ $ $ $ $ $ 428 489 442 453 373 380 350 515 331 594 Average of FullSum of Full- Average of Fullbenefit Child benefit Child benefit Child enrollees per enrollees enrollees Month $ 14,627 $ 3,657 $ 305 $ 5,732 $ 2,866 $ 239 $ 19,691 $ 3,282 $ 273 $ 20,218 $ 2,888 $ 241 $ 15,445 $ 2,574 $ 215 $ 12,094 $ 3,023 $ 252 $ 13,788 $ 3,447 $ 287 $ 18,995 $ 3,166 $ 264 $ 10,785 $ 2,696 $ 225 $ 11,289 $ 3,763 $ 314 Average of FullSum of Full- Average of Fullbenefit Adult benefit Adult benefit Adult enrollees per enrollees enrollees Month $ 21,033 $ 5,258 $ 438 $ 11,526 $ 5,763 $ 480 $ 34,455 $ 5,743 $ 479 $ 44,466 $ 6,352 $ 529 $ 29,873 $ 4,979 $ 415 $ 19,913 $ 4,978 $ 415 $ 25,061 $ 6,265 $ 522 $ 37,726 $ 6,288 $ 524 $ 17,957 $ 4,489 $ 374 $ 22,792 $ 7,597 $ 633 * Region 01 does not include Vermont due to differences the way CMS-64 and MSIS spending data is reported. It also does not include Rhode Island due to data reliability concerns ** Region 07 does not include Louisiana due to data reliablity concerns *** Region 10 does not include Idaho due to data reliablity concerns Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 6 HHS-CMS-17-0318-A-000006 Table 3 -- Medicaid Benefit Spending Per Child Enrollee State Rankings State Alaska New Mexico Missouri Massachusetts Montana Minnesota North Dakota Utah Pennsylvania Maine Delaware Connecticut New Hampshire Kentucky Oklahoma District of Columbia Arkansas Maryland California Virginia West Virginia New York North Carolina Texas South Dakota Arizona Mississippi New Jersey Oregon Nevada Nebraska Iowa Kansas Illinois Tennessee Colorado Washington Wyoming Ohio Georgia Michigan Indiana Alabama South Carolina Wisconsin Hawaii Florida Idaho Louisiana Rhode Island Vermont Region 10 07 06 01 08 05 08 08 03 01 03 01 01 04 07 03 07 03 09 03 03 02 04 07 08 09 04 02 10 09 06 06 06 05 04 08 10 08 05 04 05 05 04 04 05 09 04 10 07 01 01 All Child enrollees FYE $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,957 4,196 4,056 4,054 3,811 3,688 3,662 3,573 3,563 3,538 3,476 3,463 3,458 3,422 3,385 3,373 3,338 3,278 3,107 3,021 2,972 2,943 2,893 2,846 2,831 2,810 2,792 2,769 2,747 2,701 2,688 2,674 2,671 2,595 2,594 2,574 2,554 2,550 2,483 2,301 2,301 2,270 2,252 2,094 2,041 2,017 1,899 - All Child Enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ State 496 350 338 338 318 307 305 298 297 295 290 289 288 285 282 281 278 273 259 252 248 245 241 237 236 234 233 231 229 225 224 223 223 216 216 215 213 213 207 192 192 189 188 174 170 168 158 - Alaska New Mexico Massachusetts Missouri Montana Minnesota North Dakota Utah Pennsylvania Maine Delaware Connecticut New Hampshire Kentucky Oklahoma Arkansas District of Columbia Maryland California Virginia West Virginia New York North Carolina Arizona Texas South Dakota Oregon Mississippi New Jersey Nebraska Nevada Iowa Kansas Illinois Tennessee Wyoming Colorado Washington Ohio Michigan Georgia Indiana Alabama South Carolina Wisconsin Hawaii Florida Idaho Louisiana Rhode Island Vermont Region 10 07 01 06 08 05 08 08 03 01 03 01 01 04 07 07 03 03 09 03 03 02 04 09 07 08 10 04 02 06 09 06 06 05 04 08 08 10 05 05 04 05 04 04 05 09 04 10 07 01 01 Full-benefit Child Full-benefit Child enrollees FYE1 enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,957 4,194 4,162 4,057 3,811 3,698 3,662 3,566 3,561 3,542 3,500 3,465 3,458 3,416 3,385 3,374 3,373 3,266 3,240 3,019 2,972 2,964 2,891 2,844 2,835 2,831 2,793 2,791 2,768 2,688 2,685 2,679 2,669 2,595 2,594 2,567 2,558 2,539 2,488 2,315 2,300 2,270 2,252 2,095 2,078 2,015 1,880 - $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 496 350 347 338 318 308 305 297 297 295 292 289 288 285 282 281 281 272 270 252 248 247 241 237 236 236 233 233 231 224 224 223 222 216 216 214 213 212 207 193 192 189 188 175 173 168 157 - Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 7 HHS-CMS-17-0318-A-000007 Table 4 -- Medicaid Benefit Spending Per Adult Enrollee State Rankings State Alaska West Virginia Montana Kentucky Oregon Nebraska New Jersey Minnesota North Dakota Utah South Dakota Wyoming North Carolina Connecticut Washington Delaware New Mexico District of Columbia New York Maine Mississippi Indiana Maryland Colorado Kansas Georgia Virginia Arizona New Hampshire Michigan Oklahoma Tennessee Nevada Missouri Texas Massachusetts Florida Hawaii Ohio Pennsylvania Illinois South Carolina Wisconsin Alabama California Arkansas Iowa Idaho Louisiana Rhode Island Vermont Region 10 03 08 04 10 06 02 05 08 08 08 08 04 01 10 03 07 03 02 01 04 05 03 08 06 04 03 09 01 05 07 04 09 06 07 01 04 09 05 03 05 04 05 04 09 07 06 10 07 01 01 All Adult enrollees FYE $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 8,879 7,143 7,139 6,835 6,505 6,443 6,314 6,304 6,303 6,227 6,198 6,134 6,126 6,036 6,000 5,547 5,531 5,466 5,412 5,392 5,305 5,128 5,094 5,072 5,004 5,000 4,970 4,894 4,894 4,615 4,509 4,411 4,356 4,310 4,306 4,244 4,155 4,066 4,010 3,603 3,582 3,499 3,214 2,731 2,594 2,472 2,471 - All Adult Enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ State 740 595 595 570 542 537 526 525 525 519 517 511 510 503 500 462 461 455 451 449 442 427 424 423 417 417 414 408 408 385 376 368 363 359 359 354 346 339 334 300 298 292 268 228 216 206 206 - Alaska Montana North Carolina New Mexico West Virginia Oregon Washington Kentucky Minnesota Wyoming Nebraska Virginia Missouri North Dakota Delaware South Dakota Oklahoma Arkansas Connecticut New Jersey Utah Mississippi Georgia New York Maine District of Columbia Texas Michigan Indiana Arizona South Carolina Alabama Ohio New Hampshire Maryland Colorado Kansas Massachusetts Pennsylvania California Tennessee Nevada Hawaii Florida Illinois Wisconsin Iowa Idaho Louisiana Rhode Island Vermont Full-benefit Full-benefit Region Adult enrollees Adult enrollees/Month FYE1 10 $ 8,869 $ 739 08 $ 8,031 $ 669 04 $ 7,631 $ 636 07 $ 7,503 $ 625 03 $ 7,140 $ 595 10 $ 7,039 $ 587 10 $ 6,884 $ 574 04 $ 6,749 $ 562 05 $ 6,613 $ 551 08 $ 6,548 $ 546 06 $ 6,434 $ 536 03 $ 6,316 $ 526 06 $ 6,303 $ 525 08 $ 6,298 $ 525 03 $ 6,206 $ 517 08 $ 6,124 $ 510 07 $ 6,100 $ 508 07 $ 6,076 $ 506 01 $ 6,075 $ 506 02 $ 6,064 $ 505 08 $ 5,903 $ 492 04 $ 5,864 $ 489 04 $ 5,633 $ 469 02 $ 5,463 $ 455 01 $ 5,422 $ 452 03 $ 5,382 $ 448 07 $ 5,381 $ 448 05 $ 5,375 $ 448 05 $ 5,361 $ 447 09 $ 5,337 $ 445 04 $ 5,121 $ 427 04 $ 5,077 $ 423 05 $ 4,989 $ 416 01 $ 4,896 $ 408 03 $ 4,851 $ 404 08 $ 4,823 $ 402 06 $ 4,771 $ 398 01 $ 4,641 $ 387 03 $ 4,560 $ 380 09 $ 4,474 $ 373 04 $ 4,413 $ 368 09 $ 4,089 $ 341 09 $ 4,058 $ 338 04 $ 3,978 $ 331 05 $ 3,794 $ 316 05 $ 3,742 $ 312 06 $ 2,405 $ 200 10 07 01 01 - Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 8 HHS-CMS-17-0318-A-000008 The Rubik’s Cube of the American Health Insurance System The glaring flaws of the Affordable Care Act (ACA) lie in the federalization of the health insurance system, a task for which the federal government had questionable authority and no real experience. There is no national health insurance market. There are multiple markets organized around public programs and private markets that are state and local. People, not the federal government, decide for themselves what is affordable and what they value. Opposition to the ACA is rooted in the coercive environment it created. It strained relationships between citizens and its servant, the federal government, and between the federal government and the states. Future efforts should focus on the return of authority and responsibilities to the states. Individuals and states must have the resources necessary to participate in the insurance system. A viable market also requires an engaged purchaser who values the product enough to share in the cost in a meaningful way. As typically understood, health insurance serves two major purposes—to gain access to necessary care and to protect against unforeseen and unpredictable financial losses. For people at lower income levels, however, there is a third purpose—it can be a pathway to economic independence if properly designed. Assisting individuals to move out of poverty due to increased earnings benefits everyone. However, if the AHCA is not constructed correctly, it could continue to keep people on Medicaid and out of the workforce. That would be the polar opposite of what good policy should seek to achieve. The health insurance system in the US can be described as a type of “Rubik’s Cube” comprised of six different but interrelated markets. How one side of the cube or even one row is changed affects another. The ACA scrambled the health insurance system, but by no means did it solve it. The disruption in the health insurance system continues to reverberate. While stabilizing the market in the short term, no more than 2 years, is essential, how the system will work after that period is of greater importance. Over half of Americans, about 174 million people, receive coverage through their employers. However, there are significant differences in whether coverage is available and in the way coverage is purchased based on the size of the employer. Thus, side one is the large group employer sponsored insurance (ESI) market and side two is the small group ESI market. The advent of the ACA resulted in some erosion in the small group ESI market as was witnessed after the creation of the Children’s Health Insurance Program (CHIP) 20 years ago (see Chart 1). People will naturally pursue economic incentives that are more favorable than their current condition. Medicaid and the Children’s Health Insurance Program (CHIP) market which cover about 85 million people are on side three; side four is Medicare which covers about 56 million people; side five is the individual market, covering 26 million people including those receiving federal subsidies to cover at least some of the costs for their premiums and cost sharing; and side six is the 28 million who remain “self insured. 1” This group on side six includes people who can afford coverage but choose not to purchase it as well as those for whom coverage is not affordable because they have low-incomes. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/NationalHealthAccountsProjected.html Table 17 1 1 HHS-CMS-17-0318-A-000009 The group on side six includes people who can afford coverage but choose not to purchase it and those for whom coverage is not affordable because they have low-incomes. In 2013, the percentage of adults aged 18-64 who were uninsured and poor (below 100% FPL) was 40%. But even though they did not have insurance, two-thirds of adults ages 18-64 in poverty reported had a “usual place to go for medical care” in 2013. Just 16.8% reported they did not obtain needed medical care due to cost. Similarly, 37.8% of the “near poor” (those with income between 100 and 200% FPL) were uninsured in 2013. But 71.1% reported a usual place to go for medical care and 14.6% reported they did not obtain needed medical care due to cost at some time in the past 12 months. By 2015, those uninsured poor adults fell to 26.2% and those who reported they did not obtain needed medical care declined to 12.4%. The percentage of uninsured near poor adults fell to 23.9% and those who reported they did not obtain needed medical care declined to 11.0%. By comparison, the percentage of not uninsured poor adults fell from 11.7% to 7.7% between 2013 and 2015. 2 In other words, of those who were uninsured with income up to 200% FPL, roughly half reported that cost was a barrier to receiving care. These interrelated parts of the cube should be viewed as a single system rather than separate, isolated programs. More specifically, Medicaid, CHIP, the individual market, and the uninsured are particularly intertwined. The movement between the sides of the cube can be observed with the creation of CHIP 20 years ago. As Chart 1 illustrates, 55% of near poor children (family income 100-200% of poverty, the target group for CHIP) had private insurance; 24.3% had public coverage and 22.8% were uninsured in 1997. 3 Over time, the percentage of near poor children with private insurance declined and the percentage of near poor children with public insurance increased as the percentage of near poor children dropped. In 2003, the lines crossed and the percentage of near poor children with public coverage exceeded the percentage with private insurance. By 2012, only 31.1% of near poor children had private coverage and 61.2% had public coverage and 9.7% were uninsured. https://www.cdc.gov/nchs/products/databriefs/db262.htm https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201212.pdf Tables 5 and 6. 2 3 2 HHS-CMS-17-0318-A-000010 CHART 1 -- PERCENTAGE OF NEAR POOR PERSONS BY COVERAGE UNDER AGE 18 70 60 so "' z 0 lQ .... CL. ... 0 40 I- z.... I.I ~ Public Plan CL. -+- Private Insurance ..._ Uninsured .... 0: 30 20 10 0 1997 1999 2001 2003 2005 2007 2009 2011 Source: CDC/NCHS, National Health Interview Survey, 2012, Family Core Component CHIP and the ACA are evidence, as if any were really needed, to support the well-established principle that individuals, acting in their self-interest, will pursue the option most favorable to them. While the health insurance system is particularly sensitive in the way it relies on younger, healthier individuals to participate in order to lower premiums for those who are older and thereby use more services, it is by no means the only industry that depends on attracting people of all ages. There are numerous examples of other industries that attract people of all income levels and age groups by offering a wide array of choices. Millions of the young, healthy lives needed to stabilize premiums in the individual market are ensconced in the Medicaid and CHIP programs. If the benefits and subsidies in the 3 HHS-CMS-17-0318-A-000011 individual market are not sufficient to make coverage in the individual market attractive, then people will stay on Medicaid. Many people stay on Medicaid because they may not know there is a viable alternative and it is better than private insurance in many respects. That is a rational decision for an individual or family to make, so the flaw is in the design which makes one program more attractive than another. A better approach is to add more people, rather than extra taxpayer dollars, to the nongroup insurance pool to lower premiums for everyone. The Rubik’s Cube of the American Health Insurance System may not be able to be solved, but it can be brought into closer alignment with a few major and minor twists from how it is currently configured: 1. There are about 45 million children on Medicaid and CHIP and 27 million adults on Medicaid. Moving only the nonelderly, nondisabled adults and children currently served in Medicaid and CHIP who have income above 100% of poverty would increase the number of young, healthy lives in the nongroup market by more than 50 percent. Federal funding under these programs would follow the people. 2. The House bill provides greater subsidies based on age which is reasonable from an insurance carrier perspective. The House bill also pursued an approach that tries to stabilize the individual insurance market by creating new rules for insurance companies and directing even greater taxpayer dollars, in excess of $130 billion through new programs, to insurance companies in hopes of preventing them from leaving the market. These new funds should be used instead to increase premium subsidies to people below 200% of poverty rather than prop up insurance carriers. 3. A functional market requires competition and informed consumers. Competition calls for deregulation and greater product diversity. The ACA was not the first federal intrusion into the market. Nondiscrimination rules (which actually allows for discrimination if within federal parameters) can be traced back to Kennedy-Kassabaum in the 1990s. But the federal role should be reduced. Much of the rate review process, for example, is duplicative and the federal review after state review results in few changes. 4. The way people currently shop masks the actual cost of the insurance product. Change the way subsidies are set and the selection process so individuals know how much their premium subsidy amount is worth first then let them shop for the best coverage that meets their needs for that level of funding. Set age-adjusted premiums as the House does, expressed as a federal contribution as a percentage of the premium rather than an percentage of an individual’s income. For a family, fix the “family glitch” and place an aggregate family cap on premiums. 5. Let people shop wherever they want. Federal funding to individuals and to states for those who remain in Medicaid should be equitable with the nongroup market to ensure states have adequate resources. Medicaid spending and tax subsidies can be a useful comparison for policymakers, for example, to assess whether tax subsidies for the population with income less than 200% FPL will be sufficient. The tables that follow have been constructed from recently published MACPAC stats (using 2013 data) might be useful in making that assessment. 4 HHS-CMS-17-0318-A-000012 Table 1 and Table 2 suggest that, while there is no national market, analyzing spending among states in the same federal HHS region tends to reduce variation. 4 It is also important to remember that the Medicaid population pays little or no cost sharing The state-by-state rankings in Tables 3 and 4 might be surprising based on what policymakers typically hear about Medicaid: that the match rate distorts payments, “liberal states” are more generous than “conservative” states so payments are much higher in “liberal states,” etc. The data shows there are state differences, but volume matters as a course of economics as does competition. A further note to the Medicaid data below—some but not all “supplemental payments” have been allocated among the eligibility groups. All types of supplemental payments, payments under the Disproportionate Share Hospital (DSH), low-income subsidy pools, and other special payments exceed $50 billion annually. Over the past few years, several Medicaid expansion states and non-expansion states have been permitted to tap additional federal funding for their programs. For those children and adults who remain in Medicaid, the Senate should look back 20 years to the last time there was bipartisan support for major healthcare reform--the creation of the CHIP program. There were features of that agreement that could be adopted today. These include: • • • • State authority and flexibility in service delivery Five benchmark plan options, including an option based on actuarial value, for benefits would replace “mandatory” and “optional” services Capped allotments that would guarantee a predictable level of federal funding but eliminate the financial morass of supplemental payments that cause tensions and jealousies among the states a financial Maintenance-of-Effort (MOE) could replace enhanced match rates The Rubik’s Cube of the American Health Insurance System may not be able to be solved, but it can be brought into closer alignment. The 10 HHS regions are organized for a variety of reasons including political considerations. To review the states within each region, please see: https://www.hhs.gov/about/agencies/iea/regional-offices/. 4 5 HHS-CMS-17-0318-A-000013 Tables 1 & 2 -- Medicaid Benefit Spending Per Enrollee by Federal Region and Eligibility Group Federal Region 01* 02 03 04 05 06 07** 08 09 10*** Federal Region 01* 02 03 04 05 06 07** 08 09 10*** Average of All Sum of All Child Average of All Child Enrollees Enrollees Child Enrollees per Month $ $ $ $ $ $ $ $ $ $ 14,513 5,711 19,683 20,247 15,378 12,090 13,765 19,001 10,635 11,258 $ $ $ $ $ $ $ $ $ $ 3,628 2,856 3,280 2,892 2,563 3,023 3,441 3,167 2,659 3,753 $ $ $ $ $ $ $ $ $ $ 302 238 273 241 214 252 287 264 222 313 Average of All Sum of All Average of All Adult Enrollees Adult Enrollees Adult Enrollees per Month $ $ $ $ $ $ $ $ $ $ 20,565 11,726 31,822 38,060 26,852 18,228 16,818 37,072 15,910 21,384 $ $ $ $ $ $ $ $ $ $ 5,141 5,863 5,304 5,437 4,475 4,557 4,204 6,179 3,978 7,128 $ $ $ $ $ $ $ $ $ $ 428 489 442 453 373 380 350 515 331 594 Average of FullSum of Full- Average of Fullbenefit Child benefit Child benefit Child enrollees per enrollees enrollees Month $ 14,627 $ 3,657 $ 305 $ 5,732 $ 2,866 $ 239 $ 19,691 $ 3,282 $ 273 $ 20,218 $ 2,888 $ 241 $ 15,445 $ 2,574 $ 215 $ 12,094 $ 3,023 $ 252 $ 13,788 $ 3,447 $ 287 $ 18,995 $ 3,166 $ 264 $ 10,785 $ 2,696 $ 225 $ 11,289 $ 3,763 $ 314 Average of FullSum of Full- Average of Fullbenefit Adult benefit Adult benefit Adult enrollees per enrollees enrollees Month $ 21,033 $ 5,258 $ 438 $ 11,526 $ 5,763 $ 480 $ 34,455 $ 5,743 $ 479 $ 44,466 $ 6,352 $ 529 $ 29,873 $ 4,979 $ 415 $ 19,913 $ 4,978 $ 415 $ 25,061 $ 6,265 $ 522 $ 37,726 $ 6,288 $ 524 $ 17,957 $ 4,489 $ 374 $ 22,792 $ 7,597 $ 633 * Region 01 does not include Vermont due to differences the way CMS-64 and MSIS spending data is reported. It also does not include Rhode Island due to data reliability concerns ** Region 07 does not include Louisiana due to data reliablity concerns *** Region 10 does not include Idaho due to data reliablity concerns Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 6 HHS-CMS-17-0318-A-000014 Table 3 -- Medicaid Benefit Spending Per Child Enrollee State Rankings State Alaska New Mexico Missouri Massachusetts Montana Minnesota North Dakota Utah Pennsylvania Maine Delaware Connecticut New Hampshire Kentucky Oklahoma District of Columbia Arkansas Maryland California Virginia West Virginia New York North Carolina Texas South Dakota Arizona Mississippi New Jersey Oregon Nevada Nebraska Iowa Kansas Illinois Tennessee Colorado Washington Wyoming Ohio Georgia Michigan Indiana Alabama South Carolina Wisconsin Hawaii Florida Idaho Louisiana Rhode Island Vermont Region 10 07 06 01 08 05 08 08 03 01 03 01 01 04 07 03 07 03 09 03 03 02 04 07 08 09 04 02 10 09 06 06 06 05 04 08 10 08 05 04 05 05 04 04 05 09 04 10 07 01 01 All Child enrollees FYE $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,957 4,196 4,056 4,054 3,811 3,688 3,662 3,573 3,563 3,538 3,476 3,463 3,458 3,422 3,385 3,373 3,338 3,278 3,107 3,021 2,972 2,943 2,893 2,846 2,831 2,810 2,792 2,769 2,747 2,701 2,688 2,674 2,671 2,595 2,594 2,574 2,554 2,550 2,483 2,301 2,301 2,270 2,252 2,094 2,041 2,017 1,899 - All Child Enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ State 496 350 338 338 318 307 305 298 297 295 290 289 288 285 282 281 278 273 259 252 248 245 241 237 236 234 233 231 229 225 224 223 223 216 216 215 213 213 207 192 192 189 188 174 170 168 158 - Alaska New Mexico Massachusetts Missouri Montana Minnesota North Dakota Utah Pennsylvania Maine Delaware Connecticut New Hampshire Kentucky Oklahoma Arkansas District of Columbia Maryland California Virginia West Virginia New York North Carolina Arizona Texas South Dakota Oregon Mississippi New Jersey Nebraska Nevada Iowa Kansas Illinois Tennessee Wyoming Colorado Washington Ohio Michigan Georgia Indiana Alabama South Carolina Wisconsin Hawaii Florida Idaho Louisiana Rhode Island Vermont Region 10 07 01 06 08 05 08 08 03 01 03 01 01 04 07 07 03 03 09 03 03 02 04 09 07 08 10 04 02 06 09 06 06 05 04 08 08 10 05 05 04 05 04 04 05 09 04 10 07 01 01 Full-benefit Child Full-benefit Child enrollees FYE1 enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,957 4,194 4,162 4,057 3,811 3,698 3,662 3,566 3,561 3,542 3,500 3,465 3,458 3,416 3,385 3,374 3,373 3,266 3,240 3,019 2,972 2,964 2,891 2,844 2,835 2,831 2,793 2,791 2,768 2,688 2,685 2,679 2,669 2,595 2,594 2,567 2,558 2,539 2,488 2,315 2,300 2,270 2,252 2,095 2,078 2,015 1,880 - $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 496 350 347 338 318 308 305 297 297 295 292 289 288 285 282 281 281 272 270 252 248 247 241 237 236 236 233 233 231 224 224 223 222 216 216 214 213 212 207 193 192 189 188 175 173 168 157 - Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 7 HHS-CMS-17-0318-A-000015 Table 4 -- Medicaid Benefit Spending Per Adult Enrollee State Rankings State Alaska West Virginia Montana Kentucky Oregon Nebraska New Jersey Minnesota North Dakota Utah South Dakota Wyoming North Carolina Connecticut Washington Delaware New Mexico District of Columbia New York Maine Mississippi Indiana Maryland Colorado Kansas Georgia Virginia Arizona New Hampshire Michigan Oklahoma Tennessee Nevada Missouri Texas Massachusetts Florida Hawaii Ohio Pennsylvania Illinois South Carolina Wisconsin Alabama California Arkansas Iowa Idaho Louisiana Rhode Island Vermont Region 10 03 08 04 10 06 02 05 08 08 08 08 04 01 10 03 07 03 02 01 04 05 03 08 06 04 03 09 01 05 07 04 09 06 07 01 04 09 05 03 05 04 05 04 09 07 06 10 07 01 01 All Adult enrollees FYE $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 8,879 7,143 7,139 6,835 6,505 6,443 6,314 6,304 6,303 6,227 6,198 6,134 6,126 6,036 6,000 5,547 5,531 5,466 5,412 5,392 5,305 5,128 5,094 5,072 5,004 5,000 4,970 4,894 4,894 4,615 4,509 4,411 4,356 4,310 4,306 4,244 4,155 4,066 4,010 3,603 3,582 3,499 3,214 2,731 2,594 2,472 2,471 - All Adult Enrollees/Month $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ State 740 595 595 570 542 537 526 525 525 519 517 511 510 503 500 462 461 455 451 449 442 427 424 423 417 417 414 408 408 385 376 368 363 359 359 354 346 339 334 300 298 292 268 228 216 206 206 - Alaska Montana North Carolina New Mexico West Virginia Oregon Washington Kentucky Minnesota Wyoming Nebraska Virginia Missouri North Dakota Delaware South Dakota Oklahoma Arkansas Connecticut New Jersey Utah Mississippi Georgia New York Maine District of Columbia Texas Michigan Indiana Arizona South Carolina Alabama Ohio New Hampshire Maryland Colorado Kansas Massachusetts Pennsylvania California Tennessee Nevada Hawaii Florida Illinois Wisconsin Iowa Idaho Louisiana Rhode Island Vermont Full-benefit Full-benefit Region Adult enrollees Adult enrollees/Month FYE1 10 $ 8,869 $ 739 08 $ 8,031 $ 669 04 $ 7,631 $ 636 07 $ 7,503 $ 625 03 $ 7,140 $ 595 10 $ 7,039 $ 587 10 $ 6,884 $ 574 04 $ 6,749 $ 562 05 $ 6,613 $ 551 08 $ 6,548 $ 546 06 $ 6,434 $ 536 03 $ 6,316 $ 526 06 $ 6,303 $ 525 08 $ 6,298 $ 525 03 $ 6,206 $ 517 08 $ 6,124 $ 510 07 $ 6,100 $ 508 07 $ 6,076 $ 506 01 $ 6,075 $ 506 02 $ 6,064 $ 505 08 $ 5,903 $ 492 04 $ 5,864 $ 489 04 $ 5,633 $ 469 02 $ 5,463 $ 455 01 $ 5,422 $ 452 03 $ 5,382 $ 448 07 $ 5,381 $ 448 05 $ 5,375 $ 448 05 $ 5,361 $ 447 09 $ 5,337 $ 445 04 $ 5,121 $ 427 04 $ 5,077 $ 423 05 $ 4,989 $ 416 01 $ 4,896 $ 408 03 $ 4,851 $ 404 08 $ 4,823 $ 402 06 $ 4,771 $ 398 01 $ 4,641 $ 387 03 $ 4,560 $ 380 09 $ 4,474 $ 373 04 $ 4,413 $ 368 09 $ 4,089 $ 341 09 $ 4,058 $ 338 04 $ 3,978 $ 331 05 $ 3,794 $ 316 05 $ 3,742 $ 312 06 $ 2,405 $ 200 10 07 01 01 - Source: MACPAC, Exhibit 22, Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2013 8 HHS-CMS-17-0318-A-000016 6 Steps to a More Balanced, More Equitable and More Viable Health Insurance Markets for Purchasing Nongroup Coverage Congress should base the American Health Care Act (AHCA) nongroup market provisions as the replacement of the Affordable Care Act (ACA) on the following assumptions: • • • • • • • • • There is NO national health insurance market. Health insurance markets are state and local. The American health insurance system is really like a Rubik’s Cube and how one side of the cube is changed will affect another. Subsidies in the private insurance market cannot be changed without an impact on Medicaid and vice-versa. The federalization of the health insurance regulatory apparatus adds little or no value to consumers. The free market cannot function without informed consumers who understand that they are shopping for health insurance as they would any other product. Ultimately, individuals, not government, decide for themselves what is affordable and what they value. There is a public interest and a public good in protecting those who face increased financial costs for their health insurance and health care due to their medical conditions which place the cost of their care outside the norm of their age group. Replacement of the ACA should mirror the principles of insurance—providing access to necessary to medical services and protect against unseen, unpredictable future costs. Replacement should also recognize there is a third purpose of health insurance—for the low income population, it can be a pathway out of poverty. Without assurance of access to affordable insurance, people will stay on Medicaid. The House version of the AHCA is highly leveraged towards artificially propping up insurance carriers. If such levels are funding are acceptable, they could be used more efficiently by directing funding to individuals who should be empowered as informed shoppers. The AHCA maintains the ACA complicated “distribution” system of providing subsidies and “collection” system of receiving the individual’s contribution for premiums based on their percentage of income. Repeal and Reform should also achieve the following objectives: • • • • Produce more educated shoppers for insurance Result in greater equity among working Americans Lower work disincentives that keep people on Medicaid Simplification of the distribution system and collection system will reduce the ACA-driven federal bureaucracy at the Internal Revenue Service (IRS) and the Centers for Medicare and Medicaid Services (CMS). Step 1—Decentralization of Insurance Regulation to States The critical issues of pre-existing conditions and community-rating in the nongroup market are not new. They have reverberated around the insurance market for decades. The ACA provided one solution, but the federal intervention into the nongroup market with individual mandates and age bands only distorted market prices even more. Federal policies (current and proposed) mask the impact of those market distortions with even greater federal subsidies to carriers to keep them in the market. HHS-CMS-17-0318-A-000017 The AHCA should modify the federal role in dealing with pre-existing conditions, community-rating, and continuous coverage accordingly: • • • • • • • • Federal subsidies in the nongroup market should be sufficient to cover the cost of a health insurance plan that meets [95%, 98%?]of the health care costs of the population in a state. On an annual basis, the state department responsible for regulating health insurance would be required to produce an actuarial statement on premiums that would be sufficient to cover the cost of care of [95%,98%?] of the population in each of the following age bands: Aged < 20 Aged 20-30 Aged 31-40 Aged 41-50 Aged 51-55 Aged 56-60 Aged 61-65 Each state in advance of the annual enrollment period would publish the plans available in the state that meet the upper threshold that includes age-adjustment, community-rating, and continuous coverage. Step 2—Federal “Back Stop” Grants to Cover Costs of the [5%/2%?] Highest Cost Individuals The AHCA, as passed by the House, provides for $130 billion in funding to support the insurance carriers. These funds should be used instead as grants to states that would provide additional protection for the highest cost individuals who had purchased coverage in the individual market but have exhausted their benefit limits. In order to qualify for such grants, states must agree to certify insurance plans that meet no less than the [95%, 98%] of cost requirement regardless of pre-existing conditions in each of the age bands. States must certify only plans that sell to all ages. States must also require plans to guarantee consumers continuous coverage. Funds would be used to reimburse providers, not carriers. Providers would receive a blended rate based on commercial rates they receive from all carriers. These funds would be available only to cover the cost of care of individuals who had purchased coverage in the nongroup market. No state match would be required. Step 3— Create price-informed consumers The “shopping experience” under the ACA (and the AHCA) restricts individuals to purchasing on the federal or state “marketplace.” This experience is widely viewed as confusing and leaves people uncertain as to what they are really purchasing. Therefore, step three is to create price-informed shoppers. Replace the ACA and AHCA subsidy structures with a “ticket to insurance” (or health scholarships or get well coupons or premium assistance or whatever else you may want to call MONEY). Tickets would be per person and aged-based. Individuals with income up to [300%FPL] would be eligible for a ticket. Illustrated amounts are below: a. b. c. d. e. Aged < 20: $2000 Aged 20-30: $3500 Aged 31-40: $4000 Aged 41-50: $4500 Aged 51-55: $5500 HHS-CMS-17-0318-A-000018 f. Aged 56-60: $6500 g. Aged 61-65: $8000 Individuals would purchase the best coverage they could find. If individuals purchase a plan with a premium that is lower than the “ticket,” they would use the remainder for direct cost-sharing or as contributions to a Health Savings Account (HSA). Purchasing would not be restricted to a state or federal Marketplace. After an individual selected a plan, the federal government would make direct payment on a monthly basis to the plan. The AHCA does not repeal the distribution system established by the ACA. This proposal replaces the ACA distribution system and reduces the bureaucracy at CMS and the IRS. Step 4-- Subsidies would be taxable income to make subsidies among workers more equitable The design of any assistance program is complicated and distorted among workers in part due to the tax code. Certain tax advantages for employer-based insurance date back to post-World War II and have resulted in workers foregoing wages in lieu of more expensive health insurance coverage. Changing the tax code will make subsidies from whatever source more equitable among Americans. Congress must find a balance in setting the subsidies so they are generous enough at lower income levels to enable individuals to purchase coverage and not too generous as to incentivize individuals or employers to drop existing ESI coverage. The ACA sliding scale individual contributions based on percentage of income are arbitrary and confusing to consumers. This replacement feature uses the tax code to simplify the collection system established by the ACA. Since the tax code is already progressive, it would favor individuals with lower incomes. AHCA age-adjusted subsidies provided under step 3 would flow through the IRS distribution and collection system as follows: 1. With the knowledge of the amount of the age-adjusted federal subsidy under step 3, individuals would shop for a plan approved under state certification. If an individual aged 31-40 picked a plan that cost only $3500 rather than $4000, she could put the $500 difference into a Health Savings Account (HSA) to use for cost-sharing. Therefore, there is no incentive to purchase a more expensive plan. 2. For example, an individual aged 31 with income of $20,000 shopping in the nongroup market finds a plan for $4000 per year. The federal government would pay 1/12th of the annual cost every month directly to the carrier. Thus, the subsidy is “advanceable”—i.e., the carrier will be guaranteed payment. There is a clear record of how many months the individual had coverage and with which carrier. The subsidy would be counted as income to the individual and therefore taxable. This ensures that the subsidy is not an entitlement and that individuals would pay for the cost of coverage based on their income level. The individual’s total income would be $24,000 ($20,00 in wages plus $4,000 in subsidy, assuming a full year of coverage). The IRS would calculate the tax liability under the regular tax schedule. The individual’s “contribution” is based on actual income rather than the imprecise and inaccurate assumptions individuals currently encounter on the federal Marketplace. HHS-CMS-17-0318-A-000019 3. This means of distribution and collection requires individuals to file federal income tax returns which will increase accuracy and reduce fraud while reducing confusion among filers. Thus, it would reduce errors, fraud, and bureaucracy. Step 5- Add tax advantage for individuals who do not rely on federal subsidies to purchase coverage in the nongroup market. The tax code should also be updated to recognize the public good and public interest of supporting individuals who use their own income to purchase coverage in the nongroup market. Individuals with incomes up to [400% FPL] would receive cost a tax credit worth [50%] of the cost of their premium. The cost of premiums would be fully deductible for individuals with income above [400%]. Step 6- Add more people rather than more money to the nongroup market pool The young, healthy lives that insurance carriers seek to lower premiums and stabilize the nongroup market are ensconced in Medicaid and the Children’s Health Insurance Program (CHIP) market instead. Let CHIP expire and cap Medicaid eligibility for non-disabled, non-elderly groups at 100% FPL. Those with income above 100% would participate in the tax-based subsidies described above. The migration over into the nongroup market would double the number of healthy lives in the nongroup market which in turn will promote competition. Carriers that served the adults and children in Medicaid and CHIP will want to keep them and thereby enter the nongroup market. Principles of Replacement I. Let Insurance Should Be Insurance There are two purposes to insurance: 1) to gain access to needed medical care; and 2) protect and individual against unforeseen and unpredictable financial losses. Under the ACA, federal subsidies shifted billions of dollars in consumer spending from private to public sources. Insurance products blended subsidies for both premiums and cost-sharing which drove prices up. People should be protected from catastrophic losses, but they should be educated buyers in the market. Too often, policy decisions are driven by the exceptions, the outliers, the special cases. New pricing should be based on what it cost to cover the medical costs of 95 percent of the general population. Those individuals who are the exceptions and experience the highest costs will still be protected. II. Synchronize Medicaid with private insurance and provide equity among states Washington has the narrative on Medicaid wrong. People are staying on Medicaid (and CHIP) because it is better in many respects than private insurance coverage (see attached chart on history of CHIP). There is little difference in access to care in a state that has a mature Medicaid managed care program. Provider reimbursement rates are distorted by supplemental payments that now account for about $50 billion in spending. But because states expanded Medicaid at different points in time, states are limited by federal law by different maintenance-of-effort rules (MOE). A state’s ability to choose a “benchmark plan” for different populations depends upon when expansion occurred. Wipe the slate clean and let states start fresh in comparison to each other. HHS-CMS-17-0318-A-000020 III. Define the Mission of Medicaid Medicaid has been given too many responsibilities. Every time there is a crisis, greater responsibilities are heaped upon the Medicaid program. It should not be the answer to every question as to how the most recent health crisis will be met. The Senate needs a better understanding of Medicaid’s core mission and the many other responsibilities it has been given by default (health care for Native Americans, emergency care for illegal aliens, natural disasters, epidemics, funding for Graduate Medical Education, special categories of providers, etc.). Medicaid is a paradox, praised and scorned as too little and too much. Conversely, it is way too late to insist that states be denied the option to use Medicaid to provide access to care for their low-income adult populations. Through the tax-based subsidies, the federal government is committing to a certain level of funding for individuals with income above the poverty level. What is the rationale for not providing that same level of assistance for people below the poverty level and let the states act on their behalf as active purchasers? States should not be rewarded nor penalized by the decisions that were made by the predecessors of current governors and legislatures; states should not be locked in by decisions on eligibility groups that go back 20 years to welfare reform; a child can be 20 years old in one state while another considers someone of that age to be an adult. Some states did not expand Medicaid and yet are able to draw down billions of dollars from the federal government in special, supplemental payments. Every state believes it is disadvantaged by the federal funding formula for Medicaid. The pathway to equity is let states choose from a variety of options for meeting the needs of its low-income population, whether that be from enrollment of a new eligibility group or extra federal funds for their safety net providers. HHS-CMS-17-0318-A-000021 STATE FLEXIBILITY IN BENEFIT PACKAGES FOR CHILDREN AND ADULTS SEC. 1937. [42 U.S.C. 1396u-7] (a) STATE OPTION OF PROVIDING BENCHMARK BENEFITS FOR CHILDREN AND LOW -INCOME ADULTS.— (1) AUTHORITY.— (A) IN GENERAL.—Notwithstanding section 1902(a)(1) (relating to statewideness), section 1902(a)(10)(B) (relating to comparability), 1902(a)(23) (relating to freedom of choice), 1906 (relating to enrollment of individuals under group health plans), 1906A (relating to premium assistance option for children, 1916 (relating to use of enrollment fees, premiums, deductibles, cost sharing and similar charges), Section 1916A, (state option for alternative premiums and cost sharing), and Section 1927 (relating to payment for covered outpatient drugs), a State, at its option as a State plan amendment, may provide for medical assistance under this title to individuals within one or more groups of children specified by the State and shall provide for any individuals within one or more groups of low-income adults solely through this section through coverage that— (i) provides benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); and (B) OPTION OF ADDITIONAL BENEFITS.—In the case of coverage described in subparagraph (A), a State, at its option, may provide such additional benefits as the State may specify. (C) TREATMENT AS MEDICAL ASSISTANCE.—Payment of premiums for such coverage under this subsection shall be treated as payment of other insurance premiums . (D) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed as— (i) requiring a State to offer all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); (ii) preventing a State from offering all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2). (2) APPLICATION.— HHS-CMS-17-0318-A-000022 (A) IN GENERAL.—Except as provided in subparagraph (B), a State may require that a full-benefit eligible individual (as defined in subparagraph (C)) who is a low-income child and shall require a full-benefit individual who is a low-income adult (as defined in subparagraph (D)) obtain benefits under this title through enrollment in coverage described in paragraph (1)(A). (B) LIMITATION ON APPLICATION.—A State may not require under subparagraph (A) an individual to obtain benefits through enrollment described in paragraph (1)(A) if the individual is within one of the following categories of individuals: (i) MANDATORY PREGNANT WOMEN.—The individual is a pregnant woman who is required to be covered under the State plan under section 1902(a)(10)(A)(i). (ii) BLIND OR DISABLED INDIVIDUALS.—The individual qualifies for medical assistance under the State plan on the basis of being blind or disabled (or being treated as being blind or disabled) without regard to whether the individual is eligible for supplemental security income benefits under title XVI on the basis of being blind or disabled and including an individual who is eligible for medical assistance on the basis of section 1902(e)(3). (iii) DUAL ELIGIBLES.—The individual is entitled to benefits under any part of title XVIII. (iv) TERMINALLY ILL HOSPICE PATIENTS.—The individual is terminally ill and is receiving benefits for hospice care under this title. (v) ELIGIBLE ON BASIS OF INSTITUTIONALIZATION.—The individual is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of the individual’s income required for personal needs. (vi) MEDICALLY FRAIL AND SPECIAL MEDICAL NEEDS INDIVIDUALS.—The individual is medically frail or otherwise an individual with special medical needs (as identified in accordance with regulations of the Secretary). (vii) BENEFICIARIES QUALIFYING FOR LONG-TERM CARE SERVICES.—The individual qualifies based on medical condition for medical assistance for long-term care services described in section 1917(c)(1)(C). HHS-CMS-17-0318-A-000023 (viii) CHILDREN IN FOSTER CARE RECEIVING CHILD WELFARE SERVICES AND CHILDREN RECEIVING FOSTER CARE OR ADOPTION ASSISTANCE.—The individual is an individual with respect to whom child welfare services are made available under part B of title IV on the basis of being a child in foster care orwith respect to whom adoption or foster care assistance is made available under part E of such title, without regard to age, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)[256]. (ix) W OMEN IN THE BREAST OR CERVICAL CANCER PROGRAM.—The individual is a woman who is receiving medical assistance by virtue of the application of sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa). (x) LIMITED SERVICES BENEFICIARIES.—The individual— (I) qualifies for medical assistance on the basis of section 1902(a)(10)(A)(ii)(XII); or (II) is not a qualified alien (as defined in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and receives care and services necessary for the treatment of an emergency medical condition in accordance with section 1903(v). (III) is not include an individual determined to be eligible by the State for medical assistance under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise eligible based on a reduction of income based on costs incurred for medical or other remedial care. (C) Low-income Child Defined.—For purposes of this title— (1) In General –the term “low-income child” means a child— (A) who is under age 18; (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income and any resource test defined by the state) does not exceed 200 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, HHS-CMS-17-0318-A-000024 (D) who is not an inmate of a correctional institution under the authority of any public agency. (D) Low-income Adult Defined.—For purposes of this title— (1) In General—the term “low-income adult” means an individual— (A) who is over age 17 but not over age 65; (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income) and any resource as defined by the state does not exceed 100 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, (D) who is not an inmate of a correctional institution under the authority of any public agency. (E) Limitations on Premiums and Cost Sharing—For purposes of this title— (1) A state may vary premiums and cost sharing to provide incentives to use coverage in the most appropriate setting; (2) A state may not require an individual or family unit to spend greater than 10 percent of income for premiums and cost-sharing in the aggregate which shall include deductibles and coinsurance amounts; and (3) The methods of payment and collection of premiums and cost sharing shall be determined by the state subject to a 30 day public comment period. (b) BASIC BENCHMARK BENEFIT PACKAGES.— (1) IN GENERAL.—For purposes of subsection (a)(1), each of the following coverages that an actuary certifies will meet or exceed the aggregate amount of basic services sufficient to meet the needs of 95 percent of general population of the children or adults eligible for medical assistance covered, including any premiums and cost sharing not to exceed 10 percent of family income, under any of the shall be considered to be benchmark coverage: HHS-CMS-17-0318-A-000025 (A) FEHBP-EQUIVALENT HEALTH INSURANCE COVERAGE.—The standard Blue Cross/Blue Shield preferred provider option service benefit plan, described in and offered under section 8903(1) of title 5, United States Code. (B) STATE EMPLOYEE COVERAGE.—A health benefits coverage plan that is offered and generally available to State employees in the State involved. (C) COVERAGE OFFERED THROUGH HMO.—The health insurance coverage plan that— (i) is offered by a health maintenance organization (as defined in section 2791(b)(3) of the Public Health Service Act[257]), and (ii) has the largest insured commercial, non-medicaid enrollment of covered lives of such coverage plans offered by such a health maintenance organization in the State involved. (D) SECRETARY-APPROVED COVERAGE.—Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage for the population proposed to be provided such coverage. (2) BENCHMARK-EQUIVALENT BASIC COVERAGE.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6)coverage that meets the following requirement shall be considered to be benchmark-equivalent coverage: (A) INCLUSION OF BASIC SERVICES.—The coverage includes benefits for items and services within each of the following categories of basic services that are medically necessary for the individual: (i) Inpatient hospital services (ii) Outpatient hospital services (ii) Physicians’ services (iii) Surgical services, including services for oral health (iv) Clinic services (including health center services) and other ambulatory health care services (v) Laboratory and x-ray services. (vi) Prescription drugs and biologicals and the administration of such drugs and biologicals, only if such drugs and biologicals are not furnished for the purpose of HHS-CMS-17-0318-A-000026 causing, or assisting in causing, the death, suicide, euthanasia, or mercy killing of a person (vii) prepregnancy family planning services and supplies (viii) prenatal care, labor and delivery, and postpartum care including care provided by a midwife (viii) Inpatient mental health services limited to 30 days every 12 month period in a facility licensed by the state (ix) Outpatient mental health services (x) Durable medical equipment and other medically-related or remedial devices (such as prosthetic devices, implants, eyeglasses, hearing aids, dental devices and adaptive devices (xi) Oral health services for adults excluding orthodontic services and devices (xii) Oral health services for children excluding orthodontic services and devices (xiii) Well-baby and well-child care, including age-appropriate immunizations. (xiv) medically necessary rehabilitative services including physical therapy, occupational therapy, and speech therapy (xv) hospice care (xvi) case management services (xvii) care coordination services (xviii) enabling services (such as transportation, translation, and outreach services only as necessary to increase access to medically primary and preventative health care services) (B) AGGREGATE ACTUARIAL VALUE EQUIVALENT TO BENCHMARK PACKAGE.—The coverage has an aggregate actuarial value that is at least actuarially equivalent to one of the benchmark benefit packages described in paragraph (1). (3) DETERMINATION OF ACTUARIAL VALUE.—The actuarial value of coverage of benchmark benefit packages shall be set forth in an actuarial opinion in an actuarial report that has been prepared— (A) by an individual who is a member of the American Academy of Actuaries; (B) using generally accepted actuarial principles and methodologies; HHS-CMS-17-0318-A-000027 (C) using a standardized set of utilization and price factors; (D) using a standardized population that is representative of the population involved; (E) applying the same principles and factors in comparing the value of different coverage (or categories of services); (F) without taking into account any differences in coverage based on the method of delivery or means of cost control or utilization used; and (G) taking into account the ability of a State to reduce benefits by taking into account the increase in actuarial value of benefits coverage offered under this title that results from the limitations on cost sharing under such coverage. The actuary preparing the opinion shall select and specify in under subparagraphs (C) and (D). (4) Coverage to Meet the Needs of Individuals With Excess Costs of 95% of General Population—the state shall describe how it will cover the medically necessary costs of individuals who have costs in excess of 95% of the general population of children or adults eligible under the state plan. (c) Secretarial approval—With respect to a State plan amendment to provide benchmark plans to eligible populations in accordance with subsections (a) and (b), such amendment shall be deemed approved within 30 days of submission by the state. A State plan amendment that modifies provisions of this title in addition to subsections (a) and (b) shall not be deemed approved but shall be considered by the Secretary under procedures for approval of a State plan amendment. (d) PUBLICATION OF PROVISIONS AFFECTED.—With respect to a State plan amendment to provide benchmark benefits in accordance with subsections (a) and (b) that is approved by the Secretary, the Secretary shall publish on the Internet website of the Centers for Medicare & Medicaid Services, a list of the provisions of this title that the Secretary has determined require changes other than those in accordance with subsections (a) and (b) shall publish in the Federal Register such additional provisions of title xix that are to be modified not later than 30 days after such date of approval. [255] February 8, 2006. [256] P.L. 111-148, §2004(c)(2), inserts “, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)”, to take effect on January 1, 2014. HHS-CMS-17-0318-A-000028 [2571 See Vol. II, P.L. 78-410, ?2791(b)(3). 6 Steps to a More Balanced, More Equitable and More Viable Health Insurance Markets for Purchasing Nongroup Coverage Congress should base the American Health Care Act (AHCA) nongroup market provisions as the replacement of the Affordable Care Act (ACA) on the following assumptions: • • • • • • • • • There is NO national health insurance market. Health insurance markets are state and local. The American health insurance system is really like a Rubik’s Cube and how one side of the cube is changed will affect another. Subsidies in the private insurance market cannot be changed without an impact on Medicaid and vice-versa. The federalization of the health insurance regulatory apparatus adds little or no value to consumers. The free market cannot function without informed consumers who understand that they are shopping for health insurance as they would any other product. Ultimately, individuals, not government, decide for themselves what is affordable and what they value. There is a public interest and a public good in protecting those who face increased financial costs for their health insurance and health care due to their medical conditions which place the cost of their care outside the norm of their age group. Replacement of the ACA should mirror the principles of insurance—providing access to necessary to medical services and protect against unseen, unpredictable future costs. Replacement should also recognize there is a third purpose of health insurance—for the low income population, it can be a pathway out of poverty. Without assurance of access to affordable insurance, people will stay on Medicaid. Economists recognize the effects of Medicaid on economic mobility. The House version of the AHCA is highly leveraged towards artificially propping up insurance carriers. If such levels are funding are acceptable, they could be used more efficiently by directing funding to individuals who should be empowered as informed shoppers. The AHCA maintains the ACA complicated “distribution” system of providing subsidies and “collection” system of receiving the individual’s contribution for premiums based on their percentage of income. Repeal and Reform should also achieve the following objectives: • • • • Produce more educated shoppers for insurance Result in greater equity among working Americans Lower work disincentives that keep people on Medicaid Simplification of the distribution system and collection system will reduce the ACA-driven federal bureaucracy at the Internal Revenue Service (IRS) and the Centers for Medicare and Medicaid Services (CMS). Step 1—Devolution of Insurance Back to States—Replace EHBs with CHIP/DRA Benchmark Plans One of the most controversial provisions of the ACA is the requirement to cover the Essential Health Benefits (EHB) package. Congress should return authority over the insurance markets by replacing the EHB with benchmark plans used by the CHIP program. Carriers would offer one or more of the benchmark plans. This would inject competition while maintaining sufficient level of coverage that has HHS-CMS-17-0318-A-000030 been used for 20 years in CHIP. States were given the option of using benchmark plans in Medicaid for certain adults by the Deficit Reduction Act of 2005 (DRA) through Section 1937. The benchmark plans include coverage provided through: 1. FEHBP-equivalent health insurance provided by the Blue Cross/Blue Shield preferred provider option 2. State employee coverage 3. Coverage offered by the largest HMO in a state 4. Secretary approved coverage 5. Benchmark-equivalent coverage which includes basic services On an annual basis, the state insurance agency would be required to produce an annual statement on premiums that would be sufficient to cover the cost of care of 95%,[or 98%] of the population in each of the following age bands: 1. 2. 3. 4. 5. 6. 7. Aged < 20 Aged 20-30 Aged 31-40 Aged 41-50 Aged 51-55 Aged 56-60 Aged 61-65 The premium statement (not to be confused with actuarial value under the ACA) would describe the level of services needed to cover 95% [or 98%] of the population in each age group. Step 2—Replace Individual Mandate and Provide Consumer Protections Through Federal “Back Stop” Grants to States to Cover Costs of the 5% [or 2%?] Highest Cost Individuals As part of the annual premium statement in Step 1, the state insurance agency would also designate those plans that provide consumer protections in the areas of pre-existing conditions, communityrating, and continuous coverage. These protections generally have bipartisan political support. States that provide such protections will be eligible to receive federal “back stop” grants to cover the health care of the highest cost individuals. The AHCA, as passed by the House, provides for $130 billion in funding to support the insurance carriers. These funds should be used instead as grants to states that would provide additional protection for the highest cost individuals who had purchased coverage in the individual market but have exhausted their benefit limits. In order to qualify for such grants, states must agree to certify insurance plans that meet no less than the [95%, 98%] of cost requirement regardless of pre-existing conditions in each of the age bands. States must certify only plans that sell to all ages. States must also require plans to guarantee consumers continuous coverage. Funds would be used to reimburse providers, not carriers. Providers would receive a blended rate based on commercial rates they receive from all carriers. These funds would be available only to cover the cost of care of individuals who had purchased coverage in the nongroup market. No state match would be required. HHS-CMS-17-0318-A-000031 Step 3— Create Price-informed Shoppers, Repeal the ACA Distribution System, and Replace the Subsidies for Premiums and Cost-Sharing The “shopping experience” under the ACA (and the AHCA) restricts individuals to purchasing on the federal or state “marketplace.” This experience is widely viewed as confusing and leaves people uncertain as to what they are really purchasing. Therefore, step three is to create price-informed shoppers. Replace the ACA and AHCA subsidy structures with a “ticket to insurance” (or health scholarships or get well coupons or premium assistance or whatever else you may want to call MONEY). Tickets would be per person and aged-based. Individuals with income up to [300%FPL] would be eligible for a ticket. Illustrated amounts are below: a. b. c. d. e. f. g. Aged < 20: $2000 Aged 20-30: $3500 Aged 31-40: $4000 Aged 41-50: $4500 Aged 51-55: $5500 Aged 56-60: $6500 Aged 61-65: $8000 Individuals would purchase the best coverage they could find. If individuals purchase a plan with a premium that is lower than the “ticket,” they would use the remainder for direct cost-sharing or as contributions to a Health Savings Account (HSA). Purchasing would not be restricted to a state or federal Marketplace. After an individual selected a plan, the federal government would make direct payment on a monthly basis to the plan. The AHCA does not repeal the distribution system established by the ACA. This proposal replaces the ACA distribution system and reduces the bureaucracy at CMS and the IRS. Step 4-- Subsidies Would be Taxable Income to Make Subsidies among Workers More Equitable The design of any assistance program for health insurance is complicated because it is difficult to make subsidies equitable across workers. Certain tax advantages for employer-based insurance date back to post-World War II when wages were controlled but benefits were not. The employer-employee contributions are not taxable to the individual but workers forego higher wages in lieu of more expensive health insurance coverage, which in many cases, encourages over-utilization of services. Moreover, most ESI covers only premiums while the ACA provides assist for cost sharing as well. Direct federal subsidies through the ACA and the AHCA are based on an individual’s percentage of income. Those subsides are not taxable but the individual receiving subsidies are paying less, as a percentage of income, than workers at the same income level are paying for coverage, most especially if the employershare of premiums is counted. The subsidies under the ACA and the AHCA are focused on making insurance “affordable,” under a federal definition of affordability. People, not government, however, decide for themselves the value of something of which affordability is only part of their decision. As work on the AHCA proceeds, policymakers should focus on whether taxpayer-provided subsidies for premiums and cost sharing are equitable as well as affordable. For example, according to the annual Employer Health Benefits survey conducted by the Kaiser Family Foundation (KFF) and the Health Research and Educational Trust (HRET), HHS-CMS-17-0318-A-000032 the total premiums for all ESI plans in 2016 averaged $6,435 for single coverage and $18,142 for family coverage. 1 Assume a worker has income equal to 150% of the federal poverty level for 2017 ($18,090 for a single individual and $36,900 for a family of four). The employee share only of such coverage ($1,129 for a single individual and $5,277 for family coverage) represents 6.2% of income for an individual and 14.3% for a family of four. But the total cost of the premium represents 26.7% of income for a single individual at 150% FPL and 36.9% for a family of four. Moreover, the worker getting coverage through ESI receives no additional assistance for cost sharing. A worker purchasing ESI coverage is paying substantially more than someone with ACA subsidies. Thus, policymakers should include a focus on making the cost of coverage more equitable among Americans. Congress must find a balance in setting the subsidies so they are generous enough at lower income levels to enable individuals to purchase coverage but not too generous as to incentivize individuals or employers to drop existing ESI coverage. The ACA sliding scale individual contributions based on percentage of income are arbitrary and confusing to consumers. This replacement feature uses the tax code to simplify the collection system established by the ACA. Since the tax code is already progressive, it would still favor individuals with lower incomes. AHCA age-adjusted subsidies provided under step 3 would flow through the IRS distribution and collection system as follows: 1. With the knowledge of the amount of the age-adjusted (but NOT income-adjusted) federal subsidy under step 3, individuals would shop for a plan among those designated under the annual premium statement. If an individual aged 31-40 picked a plan that cost only $3500 rather than $4000, she could put the $500 difference into a Health Savings Account (HSA) to use for cost-sharing. Therefore, there is no incentive to purchase a more expensive plan. 2. For example, an individual aged 31 with income of $20,000 (166% FPL) shopping in the nongroup market finds a plan for $4000 per year. The federal government would pay 1/12th of the annual cost every month directly to the carrier. Thus, the subsidy is “advanceable”—i.e., the carrier will be guaranteed payment. There is a clear record of how many months the individual had coverage and with which carrier. The subsidy would be counted as income to the individual and therefore taxable which diverges from the entitlement nature created by the ACA and continued by the AHCA. The individual’s total income would be $24,000 ($20,00 in wages plus $4,000 in subsidy, assuming a full year of coverage). The IRS would calculate the tax liability under the regular tax schedule. The individual’s “contribution” is collected in the next calendar year and is based on actual income rather than the imprecise and inaccurate assumptions individuals currently encounter on the federal Marketplace. 3. This means of distribution and collection requires individuals to file federal income tax returns which will increase accuracy and reduce fraud while reducing confusion among filers. Thus, it would reduce errors, fraud, and bureaucracy. https://kaiserfamilyfoundation.files.wordpress.com/2016/09/employer-health-benefits-2016-summary-offindings.pdf 1 HHS-CMS-17-0318-A-000033 It is also useful to examine ESI coverage in order to measure “success” in terms of take-up rates of insurance. If take-up rates under the AHCA are similar to that experienced in ESI, the reforms should be considered successful. Step 5- Make More Equitable for Individuals who do not rely on Federal subsidies to Purchase Coverage The tax code should also be updated to recognize the public good and public interest of supporting individuals who use their own income to purchase coverage in the nongroup market. Individuals with incomes up to [400% FPL] would receive cost a tax credit worth [50%] of the cost of their premium at the time they pay taxes and therefore is not advanceable. The cost of premiums would be fully deductible for individuals with income above [400%]. Step 6- Add More People Rather than More Money to the Nongroup Market Pool The young, healthy lives that insurance carriers seek to lower premiums and stabilize the nongroup market are ensconced in Medicaid and the Children’s Health Insurance Program (CHIP) market instead. Repeal CHIP in the AHCA, rather than simply let it expire two years from now, so baseline savings can be captured (approximately $50 billion over 10 years) and cap Medicaid eligibility for non-disabled, nonelderly groups at 100% FPL. Those with income above 100% would participate in the tax-based subsidies described above. The migration over into the nongroup market would double the number of healthy lives in the nongroup market which in turn will promote competition. Carriers that served the adults and children in Medicaid and CHIP will want to keep them and thereby enter the nongroup market. Principles of Replacement I. Let Insurance Should Be Insurance There are two purposes to insurance: 1) to gain access to needed medical care; and 2) protect and individual against unforeseen and unpredictable financial losses. Under the ACA, federal subsidies shifted billions of dollars in consumer spending from private to public sources. Insurance products blended subsidies for both premiums and cost-sharing which drove prices up. People should be protected from catastrophic losses, but they should be educated buyers in the market. Too often, policy decisions are driven by the exceptions, the outliers, the special cases. New pricing should be based on what it cost to cover the medical costs of 95 percent of the general population. Those individuals who are the exceptions and experience the highest costs will still be protected. II. Synchronize Medicaid with private insurance and provide equity among states Washington has the narrative on Medicaid wrong. People are staying on Medicaid (and CHIP) because it is better in many respects than private insurance coverage (see attached chart on history of CHIP). There is little difference in access to care in a state that has a mature Medicaid managed care program. Provider reimbursement rates are distorted by supplemental payments that now account for about $50 billion in spending. But because states expanded Medicaid at different points in time, states are limited by federal law by different maintenance-of-effort HHS-CMS-17-0318-A-000034 rules (MOE). A state’s ability to choose a “benchmark plan” for different populations depends upon when expansion occurred. Wipe the slate clean and let states start fresh in comparison to each other. III. Define the Mission of Medicaid Medicaid has been given too many responsibilities. Every time there is a crisis, greater responsibilities are heaped upon the Medicaid program. It should not be the answer to every question as to how the most recent health crisis will be met. The Senate needs a better understanding of Medicaid’s core mission and the many other responsibilities it has been given by default (health care for Native Americans, emergency care for illegal aliens, natural disasters, epidemics, funding for Graduate Medical Education, special categories of providers, etc.). Medicaid is a paradox, praised and scorned as too little and too much. Conversely, it is way too late to insist that states be denied the option to use Medicaid to provide access to care for their low-income adult populations. Through the tax-based subsidies, the federal government is committing to a certain level of funding for individuals with income above the poverty level. What is the rationale for not providing that same level of assistance for people below the poverty level and let the states act on their behalf as active purchasers? States should not be rewarded nor penalized by the decisions that were made by the predecessors of current governors and legislatures; states should not be locked in by decisions on eligibility groups that go back 20 years to welfare reform; a child can be 20 years old in one state while another considers someone of that age to be an adult. Some states did not expand Medicaid and yet are able to draw down billions of dollars from the federal government in special, supplemental payments. Every state believes it is disadvantaged by the federal funding formula for Medicaid. The pathway to equity is let states choose from a variety of options for meeting the needs of its low-income population, whether that be from enrollment of a new eligibility group or extra federal funds for their safety net providers. HHS-CMS-17-0318-A-000035 STATE FLEXIBILITY IN BENEFIT PACKAGES FOR LONG TERM SERVICES AND SUPPORTS SEC. 1937A.. [42 U.S.C. 1396u-7] (a) STATE OPTION OF PROVIDING LONG-TERM SERVICES AND SUPPORTSBENCHMARK BENEFITS.— (1) AUTHORITY.— (A) IN GENERAL.—Notwithstanding section 1902(a)(1) (relating to statewideness), section 1902(a)(10)(B) (relating to comparability), 1902(a)(23) (relating to freedom of choice), and any other provision of this title which would be directly contrary to the authority under this section and subject to subsection (E), a State, at its option as a State plan amendment, may provide for long-term services and supports as medical assistance under this title to individuals within one or more groups of individuals individuals who are eligible for the program due to age, blindness, or disability as definedspecified by the State through this section through coverage that— (i) provides benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); and (ii) for any individual described in section 1905(a)(4)(B) who is eligible under the State plan in accordance with paragraphs (10) and (17) of section 1902(a), consists of the items and services described in section 1905(a)(4)(B) (relating to early and periodic screening, diagnostic, and treatment services defined in section 1905(r)) and provided in accordance with the requirements of section 1902(a)(43). (B) LIMITATION.—The State may only exercise the option under subclause (VIII) of section 1902(a)(10)(A)(i) or under subparagraph (A) for an individual eligible under an eligibility category that had been established under the State plan on or before the date of the enactment of this section[255]. (BC) OPTION OF ADDITIONAL BENEFITS.—In the case of coverage described in subparagraph (A), a State, at its option, may provide such additional benefits as the State may specify. HHS-CMS-17-0318-A-000036 Formatted: Indent: Left: 0.5", First line: 0.33" (CD) TREATMENT AS MEDICAL ASSISTANCE.—Payment of premiums for such coverage under this subsection shall be treated as payment of other insurance premiums described in the third sentence of section 1905(a). . Formatted: Indent: Left: 0.33", First line: 0.5" (DE) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed as— (i) requiring a State to offer all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); (ii) preventing a State from offering all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2).; or (iii) affecting a child’s entitlement to care and services described in subsections (a)(4)(B) and (r) of section 1905 and provided in accordance with section 1902(a)(43) whether provided through benchmark coverage, benchmark equivalent coverage, or otherwise. (2) APPLICATION.— (A) IN GENERAL.—Except as provided in subparagraph (B), a State may require that a full-benefit eligible individual (as defined in subparagraph (C)) who is a low-income child and shall require a full-benefit individual who is a low-income adult (as defined in subparagraph (D)) within a group obtain benefits under this title through enrollment in coverage described in paragraph (1)(A). A State may apply the previous sentence to individuals within 1 or more groups of such individuals. (B) LIMITATION ON APPLICATION.—A State may not require under subparagraph (A) an individual to obtain benefits through enrollment described in paragraph (1)(A) if the individual is within one of the following categories of individuals: (i) MANDATORY PREGNANT WOMEN.—The individual is a pregnant woman who is required to be covered under the State plan under section 1902(a)(10)(A)(i). HHS-CMS-17-0318-A-000037 (ii) BLIND OR DISABLED INDIVIDUALS.—The individual qualifies for medical assistance under the State plan on the basis of being blind or disabled (or being treated as being blind or disabled) without regard to whether the individual is eligible for supplemental security income benefits under title XVI on the basis of being blind or disabled and including an individual who is eligible for medical assistance on the basis of section 1902(e)(3). (iii) DUAL ELIGIBLES.—The individual is entitled to benefits under any part of title XVIII. (iv) TERMINALLY ILL HOSPICE PATIENTS.—The individual is terminally ill and is receiving benefits for hospice care under this title. (v) ELIGIBLE ON BASIS OF INSTITUTIONALIZATION.—The individual is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of the individual’s income required for personal needs. (vi) MEDICALLY FRAIL AND SPECIAL MEDICAL NEEDS INDIVIDUALS.—The individual is medically frail or otherwise an individual with special medical needs (as identified in accordance with regulations of the Secretary). (vii) BENEFICIARIES QUALIFYING FOR LONG-TERM CARE SERVICES.—The individual qualifies based on medical condition for medical assistance for long-term care services described in section 1917(c)(1)(C). (viii) CHILDREN IN FOSTER CARE RECEIVING CHILD WELFARE SERVICES AND CHILDREN RECEIVING FOSTER CARE OR ADOPTION ASSISTANCE.—The individual is an individual with respect to whom child welfare services are made available under part B of title IV on the basis of being a child in foster care orwith respect to whom adoption or foster care assistance is made available under part E of such title, without regard to age, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)[256]. (ix) TANF AND SECTION 1931 PARENTS.—The individual qualifies for medical assistance on the basis of eligibility to receive assistance under a State plan funded HHS-CMS-17-0318-A-000038 under part A of title IV (as in effect on or after the welfare reform effective date defined in section 1931(i)). (ix) W OMEN IN THE BREAST OR CERVICAL CANCER PROGRAM.—The individual is a woman who is receiving medical assistance by virtue of the application of sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa). (xi) LIMITED SERVICES BENEFICIARIES.—The individual— (I) qualifies for medical assistance on the basis of section 1902(a)(10)(A)(ii)(XII); or (II) is not a qualified alien (as defined in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and receives care and services necessary for the treatment of an emergency medical condition in accordance with section 1903(v). (C) FULL-BENEFIT ELIGIBLE INDIVIDUALS.— (i) IN GENERAL.—For purposes of this paragraph, subject to clause (ii), the term “full-benefit eligible individual” means for a State for a month an individual who is determined eligible by the State for medical assistance for all services defined in section 1905(a) which are covered under the State plan under this title for such month under section 1902(a)(10)(A) or under any other category of eligibility for medical assistance for all such services under this title, as determined by the Secretary. (iiIII) EXCLUSION OF MEDICALLY NEEDY AND SPEND-DOWN POPULATIONS.—Such term shallis not include an individual determined to be eligible by the State for medical assistance under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise eligible based on a reduction of income based on costs incurred for medical or other remedial care. (C) Low-income Child Defined.—For purposes of this title— (1) In General –the term “low-income child” means a child— Formatted: Indent: Left: 0", First line: 0.5" Formatted: Indent: Left: 0.67", First line: 0.5" (A) who is under age 18; HHS-CMS-17-0318-A-000039 (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income and any resource test defined by the state) does not exceed 200 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits Formatted: Indent: Left: 1", First line: 0.5" coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, (D) who is not an inmate of a correctional institution under the authority of any public agency. (D) Low-income Adult Defined.—For purposes of this title— (1) In General—the term “low-income adult” means an individual— Formatted: Indent: Left: 0", First line: 0" Formatted: Indent: Left: 0.67", First line: 0.5" (A) who is over age 17 but not over age 65; (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income) and any resource as defined by the state does not exceed 100 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, (D) who is not an inmate of a correctional institution under the authority of any public agency. (E) Limitations on Premiums and Cost Sharing—For purposes of this title— (1) A state may vary premiums and cost sharing to provide incentives to use Formatted: Indent: Left: 0", First line: 0" Formatted: Indent: Left: 0.67", First line: 0.5" coverage in the most appropriate setting; (2) A state may not require an individual or family unit to spend greater than 10 percent of income for premiums and cost-sharing in the aggregate which shall include deductibles and coinsurance amounts; and (3) The methods of payment and collection of premiums and cost sharing shall be determined by the state subject to a 30 day public comment period. (b) BASIC BENCHMARK BENEFIT PACKAGES.— HHS-CMS-17-0318-A-000040 (1) IN GENERAL.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6),each of the following coverages that an actuary certifies will meet or exceed the aggregate amount of basic services sufficient to meet the needs of 95 percent of general population of the children or adults eligible for medical assistance covered, including any premiums and cost sharing not to exceed 10 percent of family income, under any of the shall be considered to be benchmark coverage: (A) FEHBP-EQUIVALENT HEALTH INSURANCE COVERAGE.—The standard Blue Cross/Blue Shield preferred provider option service benefit plan, described in and offered under section 8903(1) of title 5, United States Code. (B) STATE EMPLOYEE COVERAGE.—A health benefits coverage plan that is offered and generally available to State employees in the State involved. (C) COVERAGE OFFERED THROUGH HMO.—The health insurance coverage plan that— (i) is offered by a health maintenance organization (as defined in section 2791(b)(3) of the Public Health Service Act[257]), and (ii) has the largest insured commercial, non-medicaid enrollment of covered lives of such coverage plans offered by such a health maintenance organization in the State involved. (D) SECRETARY-APPROVED COVERAGE.—Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage for the population proposed to be provided such coverage. (2) BENCHMARK-EQUIVALENT BASIC COVERAGE.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6)coverage that meets the following requirement shall be considered to be benchmark-equivalent coverage: (A) INCLUSION OF BASIC SERVICES.—The coverage includes benefits for items and services within each of the following categories of basic services that are medically necessary for the individual: (i) Inpatient and outpatient hospital services. (ii) Outpatient hospital services (ii) Physicians’ services (iii) Ssurgical and medical services, including services for oral health HHS-CMS-17-0318-A-000041 (iv) Clinic services (including health center services) and other ambulatory health care services. (viii) Laboratory and x-ray services. (viiv) Coverage of pPrescription drugs. and biologicals and the administration of such drugs and biologicals, only if such drugs and biologicals are not furnished for the purpose of causing, or assisting in causing, the death, suicide, euthanasia, or mercy killing of a person (vii) prepregnancy family planning services and supplies (viii) prenatal care, labor and delivery, and postpartum care including care provided by a midwife (viii) Inpatient mental health services limited to 30 days every 12 month period in a facility licensed by the state (ix) Outpatient mental health services (x) Durable medical equipment and other medically-related or remedial devices (such as prosthetic devices, implants, eyeglasses, hearing aids, dental devices and adaptive devices (xi) Oral health services for adults excluding orthodontic services and devices Mental health services(xii) Oral health services for children. excluding orthodontic services and devices (xiiivi) Well-baby and well-child care, including age-appropriate immunizations. (xivvii) medically necessary rehabilitative services including Other appropriate preventive services, as designated by the Secretary.physical therapy, occupational therapy, and speech therapy (xv) hospice care (xvi) case management services (xvii) care coordination services (xviii) enabling services (such as transportation, translation, and outreach services only as necessary to increase access to medically primary and preventative health care services) HHS-CMS-17-0318-A-000042 (B) AGGREGATE ACTUARIAL VALUE EQUIVALENT TO BENCHMARK PACKAGE.—The coverage has an aggregate actuarial value that is at least actuarially equivalent to one of the benchmark benefit packages described in paragraph (1). (C) SUBSTANTIAL ACTUARIAL VALUE FOR ADDITIONAL SERVICES INCLUDED IN BENCHMARK PACKAGE.—With respect to each of the following categories of additional services for which coverage is provided under the benchmark benefit package used under subparagraph (B), the coverage has an actuarial value that is equal to at least 75 percent of the actuarial value of the coverage of that category of services in such package: (i) Vision services. (ii) Hearing services. (33) DETERMINATION OF ACTUARIAL VALUE.—The actuarial value of coverage of benchmark benefit packages shall be set forth in an actuarial opinion in an actuarial report that has been prepared— (A) by an individual who is a member of the American Academy of Actuaries; (B) using generally accepted actuarial principles and methodologies; (C) using a standardized set of utilization and price factors; (D) using a standardized population that is representative of the population involved; (E) applying the same principles and factors in comparing the value of different coverage (or categories of services); (F) without taking into account any differences in coverage based on the method of delivery or means of cost control or utilization used; and (G) taking into account the ability of a State to reduce benefits by taking into account the increase in actuarial value of benefits coverage offered under this title that results from the limitations on cost sharing under such coverage. The actuary preparing the opinion shall select and specify in under subparagraphs (C) and (D). (4) Coverage to Meet the Needs of Individuals With Excess Costs of 95% of General Population—the state shall describe how it will cover the medically necessary costs of individuals who have costs in excess of 95% of the general population of children or adults eligible under the state plan. HHS-CMS-17-0318-A-000043 Formatted: Indent: Left: 0", First line: 0.33" (c) Secretarial approval—With respect to a State plan amendment to provide benchmark plans to eligible populations in accordance with subsections (a) and (b), such amendment shall be deemed approved within 30 days of submission by the state. A State plan amendment that modifies provisions of this title in addition to subsections (a) and (b) shall not be deemed approved but shall be considered by the Secretary under procedures for approval of a State plan amendment. (4) COVERAGE OF RURAL HEALTH CLINIC AND FQHC SERVICES.—Notwithstanding the previous provisions of this section, a State may not provide for medical assistance through enrollment of an individual with benchmark coverage or benchmark equivalent coverage under this section unless— (A) the individual has access, through such coverage or otherwise, to services described in subparagraphs (B) and (C) of section 1905(a)(2); and (B) payment for such services is made in accordance with the requirements of section 1902(bb). (5) MINIMUM STANDARDS.—Effective January 1, 2014, any benchmark benefit package under paragraph (1) or benchmark equivalent coverage under paragraph (2) must provide at least essential health benefits as described in section 1302(b) of the Patient Protection and Affordable Care Act. (6) MENTAL HEALTH SERVICES PARITYS.— (A) IN GENERAL.—In the case of any benchmark benefit package under paragraph (1) or benchmark equivalent coverage under paragraph (2) that is offered by an entity that is not a medicaid managed care organization and that provides both medical and surgical benefits and mental health or substance use disorder benefits, the entity shall ensure that the financial requirements and treatment limitations applicable to such mental health or substance use disorder benefits comply with the requirements of section 2705(a) of the Public Health Service Act in the same manner as such requirements apply to a group health plan. (B) DEEMED COMPLIANCE.—Coverage provided with respect to an individual described in section 1905(a)(4)(B) and covered under the State plan under section 1902(a)(10)(A) of the services described in section 1905(a)(4)(B) (relating to early and periodic screening, diagnostic, and treatment services defined in section 1905(r)) and provided in accordance HHS-CMS-17-0318-A-000044 with section 1902(a)(43), shall be deemed to satisfy the requirements of subparagraph (A). (7) COVERAGE OF FAMILY PLANNING SERVICES AND SUPPLIES.—Notwithstanding the previous provisions of this section, a State may not provide for medical assistance through enrollment of an individual with benchmark coverage or benchmark-equivalent coverage under this section unless such coverage includes for any individual described in section 1905(a)(4)(C), medical assistance for family planning services and supplies in accordance with such section. (dc) PUBLICATION OF PROVISIONS AFFECTED.—With respect to a State plan amendment to provide benchmark benefits in accordance with subsections (a) and (b) that is approved by the Secretary, the Secretary shall publish on the Internet website of the Centers for Medicare & Medicaid Services, a list of the provisions of this title that the Secretary has determined require changes other than those in accordance with subsections (a) and (b) do not apply in order to enable the State to carry out the plan amendment and the reason for each such determination on the date such approval is made, and shall publish in the Federal Register such additional provisions of title xix that are to be modified list in the Federal Register and not later than 30 days after such date of approval. [255] February 8, 2006. [256] P.L. 111-148, §2004(c)(2), inserts “, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)”, to take effect on January 1, 2014. [257] See Vol. II, P.L. 78-410, §2791(b)(3). HHS-CMS-17-0318-A-000045 STATE FLEXIBILITY IN BENEFIT PACKAGES FOR CHILDREN AND ADULTS SEC. 1937. [42 U.S.C. 1396u-7] (a) STATE OPTION OF PROVIDING BENCHMARK BENEFITS FOR CHILDREN AND LOW -INCOME ADULTS.— (1) AUTHORITY.— (A) IN GENERAL.—Notwithstanding section 1902(a)(1) (relating to statewideness), section 1902(a)(4) (relating to Secretary authority to regulate state authority under the “necessary for proper and efficient administration” provision), section 1902(a)(10)(B) (relating to comparability), 1902(a)(23) (relating to freedom of choice), 1902(a)(30) (related to provider payments in general), (1903(m)(2)(A)(iii) (relating to actuarial soundness of a payment to a managed care entity) 1905(a)(4)(c) (related to family planning services), 1906 (relating to enrollment of individuals under group health plans), 1906A (relating to premium assistance option for children, 1916 (relating to use of enrollment fees, premiums, deductibles, cost sharing and similar charges), Section 1916A, (state option for alternative premiums and cost sharing), Section 1927 (relating to payment for covered outpatient drugs), and any other provision that limits a State’s authority to establish payments to providers and any other entity, a State, at its option as a State plan amendment, may provide for medical assistance under this title to individuals within one or more groups of low-income children specified by the State and may provide for any individuals within one or more groups of low-income adults specified by the State solely through this section through coverage that— (i) provides benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); and (ii) uses the authority described in 1915(b)(4) (related to selective contracting) for any type of service provided under the plan. (B) OPTION OF ADDITIONAL BENEFITS.—In the case of coverage described in subparagraph (A), a State, at its option, may provide such additional benefits as the State may specify. (C) TREATMENT AS MEDICAL ASSISTANCE.—Payment of premiums for such coverage under this subsection shall be treated as payment of other insurance premiums . HHS-CMS-17-0318-A-000046 (D) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be construed as— (i) requiring a State to offer all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2); (ii) preventing a State from offering all or any of the items and services required by subparagraph (A)(ii) through an issuer of benchmark coverage described in subsection (b)(1) or benchmark equivalent coverage described in subsection (b)(2). (2) APPLICATION.— (A) IN GENERAL.—Except as provided in subparagraph (B), a State may require that a full-benefit eligible individual (as defined in subparagraph (C)) who is a low-income child and shall require a full-benefit individual who is a low-income adult (as defined in subparagraph (D)) obtain benefits under this title through enrollment in coverage described in paragraph (1)(A). (B) LIMITATION ON APPLICATION.—A State may not require under subparagraph (A) an individual to obtain benefits through enrollment described in paragraph (1)(A) if the individual is within one of the following categories of individuals: (i) MANDATORY PREGNANT WOMEN.—The individual is a pregnant woman who is required to be covered under the State plan under section 1902(a)(10)(A)(i). (ii) BLIND OR DISABLED INDIVIDUALS.—The individual qualifies for medical assistance under the State plan on the basis of being blind or disabled (or being treated as being blind or disabled) without regard to whether the individual is eligible for supplemental security income benefits under title XVI on the basis of being blind or disabled and including an individual who is eligible for medical assistance on the basis of section 1902(e)(3). (iii) DUAL ELIGIBLES.—The individual is entitled to benefits under any part of title XVIII. (iv) TERMINALLY ILL HOSPICE PATIENTS.—The individual is terminally ill and is receiving benefits for hospice care under this title. (v) ELIGIBLE ON BASIS OF INSTITUTIONALIZATION.—The individual is an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other HHS-CMS-17-0318-A-000047 medical institution, and is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of the individual’s income required for personal needs. (vi) MEDICALLY FRAIL AND SPECIAL MEDICAL NEEDS INDIVIDUALS.—The individual is medically frail or otherwise an individual with special medical needs (as identified in accordance with regulations of the Secretary). (vii) BENEFICIARIES QUALIFYING FOR LONG-TERM CARE SERVICES.—The individual qualifies based on medical condition for medical assistance for long-term care services described in section 1917(c)(1)(C). (viii) CHILDREN IN FOSTER CARE RECEIVING CHILD WELFARE SERVICES AND CHILDREN RECEIVING FOSTER CARE OR ADOPTION ASSISTANCE.—The individual is an individual with respect to whom child welfare services are made available under part B of title IV on the basis of being a child in foster care orwith respect to whom adoption or foster care assistance is made available under part E of such title, without regard to age, or the individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(i)(IX)[256]. (ix) W OMEN IN THE BREAST OR CERVICAL CANCER PROGRAM.—The individual is a woman who is receiving medical assistance by virtue of the application of sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa). (x) LIMITED SERVICES BENEFICIARIES.—The individual— (I) qualifies for medical assistance on the basis of section 1902(a)(10)(A)(ii)(XII); or (II) is not a qualified alien (as defined in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and receives care and services necessary for the treatment of an emergency medical condition in accordance with section 1903(v). (III) is not include an individual determined to be eligible by the State for medical assistance under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise eligible based on a reduction of income based on costs incurred for medical or other remedial care. (C) Low-income Child Defined.—For purposes of this title— HHS-CMS-17-0318-A-000048 (1) In General –the term “low-income child” means a child— (A) who is under age 19; (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income and any resource test defined by the state) does not exceed 138 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, (D) who is not an inmate of a correctional institution under the authority of any public agency. (D) Low-income Adult Defined.—For purposes of this title— (1) In General—the term “low-income adult” means an individual— (A) who is over age 18 but not over age 65; (B) whose family income (as determined by federal income rules of Modified Adjusted Gross Income) and any resource as defined by the state does not exceed 100 percent of the federal poverty level; (C) who is not a member of a family that is eligible for health benefits coverage under a government benefits plan on the basis of a family member’s employment with a public agency; and, (D) who is not an inmate of a correctional institution under the authority of any public agency. (E) Limitations on Premiums and Cost Sharing—For purposes of this title— (1) A state may vary premiums and cost sharing to provide incentives to use coverage in the most appropriate setting; (2) A state may not require an individual or family unit to spend greater than 10 percent of income for premiums and cost-sharing in the aggregate which shall include deductibles and coinsurance amounts; and (3) The methods of payment and collection of premiums and cost sharing shall be determined by the state subject to a 30 day public comment period. HHS-CMS-17-0318-A-000049 (b) BASIC BENCHMARK BENEFIT PACKAGES.— (1) IN GENERAL.—For purposes of subsection (a)(1), each of the following coverages that an actuary certifies will meet or exceed the aggregate amount of basic services sufficient to meet the needs of 95 percent of general population of the children or adults eligible for medical assistance covered, including any premiums and cost sharing not to exceed 10 percent of family income, under any of the shall be considered to be benchmark coverage: (A) FEHBP-EQUIVALENT HEALTH INSURANCE COVERAGE.—The standard Blue Cross/Blue Shield preferred provider option service benefit plan, described in and offered under section 8903(1) of title 5, United States Code. (B) STATE EMPLOYEE COVERAGE.—A health benefits coverage plan that is offered and generally available to State employees in the State involved. (C) COVERAGE OFFERED THROUGH HMO.—The health insurance coverage plan that— (i) is offered by a health maintenance organization (as defined in section 2791(b)(3) of the Public Health Service Act[257]), and (ii) has the largest insured commercial, non-medicaid enrollment of covered lives of such coverage plans offered by such a health maintenance organization in the State involved. (D) SECRETARY-APPROVED COVERAGE.—Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage for the population proposed to be provided such coverage. (2) BENCHMARK-EQUIVALENT BASIC COVERAGE.—For purposes of subsection (a)(1), subject to paragraphs (5) and (6)coverage that meets the following requirement shall be considered to be benchmark-equivalent coverage: (A) INCLUSION OF BASIC SERVICES.—The coverage includes benefits for items and services within each of the following categories of basic services that are medically necessary for the individual: (i) Inpatient hospital services (ii) Outpatient hospital services (ii) Physicians’ services (iii) Surgical services, including services for oral health HHS-CMS-17-0318-A-000050 (iv) Clinic services (including health center services) and other ambulatory health care services (v) Laboratory and x-ray services. (vi) Prescription drugs and biologicals and the administration of such drugs and biologicals, only if such drugs and biologicals are not furnished for the purpose of causing, or assisting in causing, the death, suicide, euthanasia, or mercy killing of a person (vii) prepregnancy family planning services and supplies (viii) prenatal care, labor and delivery, and postpartum care including care provided by a midwife (viii) Inpatient mental health services limited to 30 days every 12 month period in a facility licensed by the state (ix) Outpatient mental health services (x) Durable medical equipment and other medically-related or remedial devices (such as prosthetic devices, implants, eyeglasses, hearing aids, dental devices and adaptive devices (xi) Oral health services for adults excluding orthodontic services and devices (xii) Oral health services for children excluding orthodontic services and devices (xiii) Well-baby and well-child care, including age-appropriate immunizations. (xiv) medically necessary rehabilitative services including physical therapy, occupational therapy, and speech therapy (xv) hospice care (xvi) case management services (xvii) care coordination services (xviii) enabling services (such as transportation, translation, and outreach services only as necessary to increase access to medically primary and preventative health care services) (B) AGGREGATE ACTUARIAL VALUE EQUIVALENT TO BENCHMARK PACKAGE.—The coverage has an aggregate actuarial value that is at least actuarially equivalent to one of the benchmark benefit packages described in paragraph (1). HHS-CMS-17-0318-A-000051 (3) DETERMINATION OF ACTUARIAL VALUE.—The actuarial value of coverage of benchmark benefit packages shall be set forth in an actuarial opinion in an actuarial report that has been prepared— (A) by an individual who is a member of the American Academy of Actuaries; (B) using generally accepted actuarial principles and methodologies; (C) using a standardized set of utilization and price factors; (D) using a standardized population that is representative of the population involved; (E) applying the same principles and factors in comparing the value of different coverage (or categories of services); (F) without taking into account any differences in coverage based on the method of delivery or means of cost control or utilization used; and (G) taking into account the ability of a State to reduce benefits by taking into account the increase in actuarial value of benefits coverage offered under this title that results from the limitations on cost sharing under such coverage. The actuary preparing the opinion shall select and specify in under subparagraphs (C) and (D). (4) Coverage to Meet the Needs of Individuals With Excess Costs of 95% of General Population—the state shall describe how it will cover the medically necessary costs of individuals who have costs in excess of 95% of the general population of children or adults eligible under the state plan. (c) Secretarial approval—With respect to a State plan amendment to provide benchmark plans to eligible populations in accordance with subsections (a) and (b), such amendment shall be deemed approved within 30 days of submission by the state. A State plan amendment that modifies provisions of this title in addition to subsections (a) and (b) shall not be deemed approved but shall be considered by the Secretary under procedures for approval of a State plan amendment. (d) PUBLICATION OF PROVISIONS AFFECTED.—With respect to a State plan amendment to provide benchmark benefits in accordance with subsections (a) and (b) that is approved by the Secretary, the Secretary shall publish on the Internet website of the Centers for Medicare & Medicaid Services, a list of the provisions of this title that the Secretary has determined require changes other than those in accordance with subsections (a) and (b) shall publish in the Federal Register such HHS-CMS-17-0318-A-000052 additional provisions of title xix that are to be modified not later than 30 days after such date of approval. HHS-CMS-17-0318-A-000053 1 Arkansas Works 2.0 Preliminary Draft for Discussion Purposes April 11, 2017 .. -..! . ARKA .NSAS f? E: HHS-CMS-17-0318-A-000054 ----~~ --- S 2 Legislative Input – 4/4/17 Legislative Input: • Medically Frail – establish process to ensure that they do need the alternative benefit plan – perhaps after 3 months • Should the state stop paying fee-for- service for medical care before QHP insurance begins. • Use of incentives to drive initial client uptake of work requirement participation. • Research best practices in other states for the “unbanked” to make monthly premiums. • Research AR Works recipients with prior incarceration. DHS Response: • DHS can review fee-for-service claims at 3 months and confirm that alternative benefit plan is appropriate. • DHS is reviewing. • DHS initiated discussion with carriers. They noted that they already provide incentives for healthy behaviors and would consider work activity a healthy behavior. • Many options exist: pre-paid debit or credit automatic bill pay, MoneyGram, in-person cash, etc. • 20,143 currently active AR Works recipients have prior incarceration or convictions. HHS-CMS-17-0318-A-000055 3 Arkansas Works 2.0 • Capping Eligibility at 100% FPL -~ 7 ~... p HHS-CMS-17-0318-A-000056 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES 4 Carrier Input – Capping Eligibility at 100% Carrier Input: • Robust, Advance Outreach is important • Good contact information for recipients is important – including email and phone numbers. • Seamless transition to FFM should be explored. • Longer Special Enrollment period DHS Response: • DHS will begin noticing affected recipients as early as August / September 2017. DHS will use county offices, provider associations, carriers, brokers and agents, and social media. • DHS is already sending monthly files with email addresses and phone numbers to carriers. DHS will work with carriers to obtain email / phone numbers where possible. • DHS will work with CMS and Carriers to facilitate seamless transition and extended special enrollment period to the extent possible. HHS-CMS-17-0318-A-000057 5 Arkansas Works 2.0 • Operationalizing Work Requirements -~ 7 ~... p HHS-CMS-17-0318-A-000058 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES Profile of Arkansas Works Population in Poverty 6 Arkansas Works Population Less Than 100% FPL • Over 50 years of age 42,057 • Medically Frail less than 50 years of age 15,814 • Able bodied, under 50, with dependent children 64,326 • "Young Able Bodied Childless Adults" 120,160 TOTAL POPULATION WITH INCOME LESS THAN 100% OF FPL 242,357 Data date: 3/16/17 -~ 7 ~... p HHS-CMS-17-0318-A-000059 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES AR Works – Exemptions Burndown 7 Data date: 3/27/17 AR WORKS RECIPIENTS LESS THAN 100% FPL AR WORKS RECIPIENTS LESS THAN 100% FPL AR WORKS RECIPIENTS LESS THAN 100% FPL TOTAL MEDICALLY FRAIL DEPENDENT MINOR AGE GROUP RECIPIENTS 187,991 19 TO 49 AGE GROUP RECIPIENTS AGE GROUP 19 TO 49 15,740 19 TO 49 REMAINING 172,251 RECIPIENTS 64,028 REMAINING 108,223 AR WORKS RECIPIENTS LESS THAN 100% FPL AR WORKS RECIPIENTS LESS THAN 100% FPL AR WORKS RECIPIENTS LESS THAN 100% FPL UNEMPLOYMENT INSURANCE MORE THAN 736.78 EARNED INCOME NO EXEMPTION AGE GROUP 19 TO 49 REMAINING RECIPIENTS 554 107,669 AGE GROUP RECIPIENTS AGE GROUP 19 TO 49 16,813 19 TO 29 45,110 30 TO 49 45,746 REMAINING 90,856 RECIPIENTS TOTAL 90,856 -~ 7 ~... p HHS-CMS-17-0318-A-000060 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES 8 Work Referrals & Work Requirements All Arkansas Works enrollees will receive a Work Referral. AR Works enrollees ages 19 – 49* will have a Work Requirement. Work Referrals 1 • • Arkansas law requires enrollees with income at 50% FPL or below to receive a work referral. DHS exceeds the requirement by issuing a work referral to all AR Works enrollees. Work Requirements 2 • Enrollees age 19-49* • Age 50 or over is a permanent exemption. • If they meet an exemption, they are not at risk for losing Medicaid coverage. 3 • Enrollees age 19-49* • If they do not meet an exemption, they will lose Medicaid coverage after 3 months of noncompliance *Work Requirement begins for 30 – 49 in 2018. Ages 19 – 29 will begin in 2019.uirements will not apply to HHS-CMS-17-0318-A-000061 enrollees ages 19-29 in 2018, but will apply in future years 9 Exemptions and Work Activities Consumer Applies Exemption information collected during application Exempt? Consumer must meet No work requirement the following month and log work activity on portal Yes Consumer receives approval notice; no additional action is required for duration of exemption Did consumer log sufficient work activity on portal? No Case closes after 3 cumulative months of noncompliance Yes Case remains open HHS-CMS-17-0318-A-000062 10 Exemptions Work Requirements Apply 2 • Enrollees age 19-49* • Meet an exemption • Not at risk for losing Medicaid coverage *19 – 29 begins in 2019 *Existing enrollees in the 30-40 age group will be phased in from January – June 2018 Information collection for catastrophic events to be handled on a case-by-base basis Criteria Validation Approach State Verifies Information Currently receiving a SNAP exemption Validated against state data every 30 days Receiving TEA Cash Assistance Validated against state data every 30 days Arkansas Works Application, Portal, or Change in Circumstance Submission Age 50 or older Permanently exempt Medically frail Initial attestation; valid until change in circumstance Living in home with dependent minor Initial attestation; valid until change in circumstance Employed > 80 hours/month Initial attestation (income > AR min wage x 80/month); valid until renewal or change in circumstance Pregnancy Initial attestation; valid until end of post-partum care (EEF calculates date) Receiving unemployment benefits Initial attestation; valid for X weeks or until change in circumstance Full-time Education, Job Training, or Vocational Training Valid for attested duration (up to 6 months); verification required to extend Caring for incapacitated person Valid for 2 months as attested by client including name and address of incapacitated adult; verification required to extend exemption Short-term incapacitation Valid for 2 months as attested by client; verification required to extend exemption Participation in alcohol or drug Valid for 2 months as attested by client; verification treatment program required to extend exemption State to verify attestations for a sample of enrollees HHS-CMS-17-0318-A-000063 11 Work Activities 3 • • • Work Requirements Apply State Verifies Information Enrollees age 19-49* Arkansas Works Application, Portal, or Change in Circumstance Submission Criteria Currently meeting SNAP work requirement Validation Approach Validated against state data every 30 days Work < 80 hours/month Attest monthly Do not meet an exemption Education (less than full time) Attest monthly Attest monthly Will lose Medicaid coverage after 3 months of noncompliance Job Training (WIOA, refugee, etc.) (less than full time) Vocational Training (less than full time) Attest monthly Volunteer Attest monthly including agency name, address, and phone number Independent Job Search Attest monthly; cannot account for more than 50% of attested hours Job Search Training Attest monthly; cannot account for more than 50% of attested hours *19 -29 begins in 2019 Information collection for catastrophic events to be handled on a case-by-base basis If client uses a combination of work activities, they have to attest monthly to each State to verify attestations for a sample of enrollees HHS-CMS-17-0318-A-000064 12 AR Works Attestation Portal Features of the AR Works Attestation Portal: • Intelligent Evidence Gathering (IEG) – Recipients will log in and answer • • • • questions to determine if they meet an exemption, and if not, to capture work requirement participation. Online Change Reporting – Information supplied in the portal will launch workflows when necessary based on information provided by recipient, i.e. Recipients reports they have met the work requirement by starting a new job. Portal will launch workflow in the eligibility system to verify reasonable compatibility and continued income eligibility. Recipient Compliance Status – The portal will show the individual how many of their 3 months of non-compliance have been used. Address / Contact Information confirmation – Recipients will be asked to confirm their address / email / phone numbers when they enter the portal. Online attestation only - There will no avenue to attest via phone or form. -~ 7 ~... p HHS-CMS-17-0318-A-000065 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES 13 Example Scenarios Application Scenario April 2018 Judy submits application on April 12, 2018. Judy applies on April 12, 2018. She is 45 years old and does not meet any exemption. She is subject to the work requirement. Judy is approved for AR Works on April 23, 2018., including a notice that she is subject to the work requirement starting in May. Exemption Scenario George is determined eligible for AR Works. He is 35 years old and has a 10 year old son living at home. Work Activity Scenario Larry is determined eligible for AR Works. He is 37 years old and does not meet any exemption. He is subject to the work requirement. May 2018 Judy is subject to the work requirement and must attest to appropriate work activities by the 5th day of June. Month 1 Month 2 Month 3 Exempt – Living in home with dependent minor George reports that his son is no longer living at home. George does not meet any other exemption. George is sent a notice that he is subject to the work requirement starting the following month. George is subject to the work requirement and must attest to appropriate work activities by the 5th day of Month 4. Month 1 Month 2 Larry does not attest to any work activities by the 5th day of Month 2. Larry attests for Month 2: • 40 volunteer hours at Habitat for Humanity • 20 hours in a job training program • 20 hours of independent job search Larry is sent a notice that he has accrued one month of non-compliance. Month 3 Larry does not attest to any work activities by the 5th day of Month 4. Larry is sent a notice that he has accrued two months of noncompliance. Month 4 Larry is sent a closure notice at least 10 days prior to the end of the month. Larry’s coverage ends at the end of Month 4. Larry does not attest to any work activities by the 5th day of Month 5. Larry cannot regain coverage until the following plan year, even if he meets an exemption. -~ 7 ~... p HHS-CMS-17-0318-A-000066 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES 14 Arkansas Works 2.0 - Timeline Begin Drafting 1115 Waiver Amendment April Arkansas Works Special Session May Consult with legislature and draft legislation April CMS Review of 1115 Waiver Amendment (minimum of 45 days) Summer 2017 30 day public comment period including two public hearings (May) Complete Drafting 1115 Waiver Amendment May Submit waiver application to CMS June Legislative Committee Review August Rule Promulgation Begins (August) Go Live Jan. 1 -~ 7 ~... p HHS-CMS-17-0318-A-000067 .-. ARKANIAI DIPARTMINI' OP HUMAN SERVICES From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) (b)(6) FW: FW: 1937 flexibility Monday, June 12, 2017 7:57:00 PM 5-29-17section1937.docx 6-4-17Section1937A.docx 6-3-17senateoption.docx     From: Dennis Smith (b)(6) Sent: Monday, June 12, 2017 7:54 PM To: Verma, Seema (CMS/OA) Subject: 1937 flexibility hope these are helpful to you. the 1937A for LTSS is not finished, but gives you enough of a framework. all the best, Dennis HHS-CMS-17-0318-A-000068 From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) (b)(6) FW: FW: AHCA Monday, June 5, 2017 8:43:00 AM 6-3-17senateoption.docx     (b)(6) From: Dennis Smith Sent: Saturday, June 3, 2017 6:14 PM To: Verma, Seema (CMS/OA) Subject: AHCA Hi, has been a while since we have had a chance to compare notes, know you are more than swamped and see that you are continuing to fill out your team. wanted to pass along some thoughts. I keep hearing the Senate is stuck and is open to new ideas, so sending an updated version of an approach that hope can be useful somehow. All the best, Dennis HHS-CMS-17-0318-A-000069 From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) (b)(6) FW: FW: AHCA/ACA ideas Friday, May 19, 2017 8:54:00 AM 5-18-17senateoption.docx 5-10-17senate (REVISED - v2).docx From: Dennis Smith (b)(6) Sent: Thursday, May 18, 2017 8:57 PM To: Verma, Seema (CMS/OA) Subject: Fwd: AHCA/ACA ideas Have thought a lot about the situation the Senate is in and thought I would jot down some ideas. They are a bit outside the DC box. Ultimately, the Senate version of the AHCA will be a leadership call. Hope they are helpful. would welcome the chance to discuss further. my cell all the best, Dennis Smith (b)(6) HHS-CMS-17-0318-A-000070 From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) (b)(6) FW: FW: making per capita caps work Friday, July 21, 2017 11:38:00 AM 7-2-17section1937.docx     From: Dennis Smith (b)(6) Sent: Friday, July 21, 2017 11:08 AM To: Verma, Seema (CMS/OA) Subject: Fwd: making per capita caps work Seema, Hope you are hanging in there! Know you are going nonstop. A huge problem with the Medicaid per capita caps is that states have not been given the control over the management of the program to live within those caps. the attached describes those areas in which states need control. As you know, Gov Hutchinson remains concerned about including disabled and elderly under the per capita caps. therefore, have drafted to cover children and adults. hope this is helpful. All the best, Dennis HHS-CMS-17-0318-A-000071 From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) (b)(6) FW: FW: Rubik"s cube Tuesday, May 16, 2017 8:05:00 AM 5-13-17ahca.docx (b)(6) From: Dennis Smith Sent: Saturday, May 13, 2017 11:57 AM To: Verma, Seema (CMS/OA) Subject: Fwd: Rubik's cube hope you find this useful as the senate takes up the ahca. thanks, Dennis HHS-CMS-17-0318-A-000072 From: To: Subject: Date: Attachments: Verma, Seema (CMS/OA) Brookes, Brady (CMS/OA) FW: FW: Wed ledge presentation Thursday, April 27, 2017 5:00:00 PM AW for leg 4_11_17.pptx From: Dennis G Smith [mailto:Dennis.G.Smith@dhs.arkansas.gov] Sent: Friday, April 14, 2017 3:38 PM To: Verma, Seema (CMS/OA) Subject: FW: Wed ledge presentation     HHS-CMS-17-0318-A-000073 From: To: Subject: Date: Verma, Seema (CMS/OA) (b)(6) FW: FW: 1115 waiver Monday, April 17, 2017 8:03:00 AM I left this in your inbox.   From: Dennis Smith (b)(6) Sent: Friday, April 14, 2017 11:15 PM To: Verma, Seema (CMS/OA) Subject: 1115 waiver   many thanks for your time today, we appreciate your consideration of our requests.  I understand that you all need to consider in making policy decisions how states which are similiarly situated would be treated equally.  in that vein, please consider Arkansas' unique situation-- even after amendment we have discussed, people above and below 100% FPL will be in the same insurance pool covered by QHPs.  for non-expansion states which might also seek the enhanced federal match for below 100% would also need to replicate Arkansas' model of putting that population into QHPs as well.  with those boundaries, the likelihood that there would be a significant Medicaid expansion seems very small. many thanks, Dennis HHS-CMS-17-0318-A-000074 From: To: Subject: Date: Verma, Seema (CMS/OA) Claire Burghoff (CMS/OA) (Claire.Burghoff@cms.hhs.gov); Diana Perez-Rivera (CMS/OA) (diana.perezrivera@cms.hhs.gov) FW: FW: phone numbers Tuesday, April 18, 2017 8:48:00 PM She would like to add these to her contacts.   From: Dennis G Smith [mailto:Dennis.G.Smith@dhs.arkansas.gov] Sent: Friday, April 14, 2017 3:54 PM To: Verma, Seema (CMS/OA) ; Neale, Brian (CMS/CMCS) Subject: phone numbers   Phone numbers for Cindy and Dennis   Cindy (b)(6)   Dennis (b)(6) HHS-CMS-17-0318-A-000075 From: To: Subject: Date: Verma, Seema (CMS/OA) (b)(6) FW: FW: what we know Sunday, March 26, 2017 12:51:00 PM From: Dennis Smith (b)(6) Sent: Sunday, March 26, 2017 12:03 PM To: Verma, Seema (CMS/OA) Subject: Fwd: what we know What we know-a. the sun came up this morning b. everything will be alright in the end; if its not alright, it is not the end c. the House is willing to settle for an amount of deficit reduction of less than $200 billion-Medicaid reform alone can produce this amount of savings while maintaining high levels of coverage d.there are a group of states that wont take Medicaid expansion even with going down to 100% FPL; so don't need to protect their ability for doing so on an equitable basis e.there are still levers to be pulled--SCHIP reauthorization and deficit reduction f.good policy is good politics g. there are still friends who want to help. Hang in there! all the best, Dennis HHS-CMS-17-0318-A-000076 From: To: Subject: Date: Dennis G Smith Verma, Seema (CMS/OA); Neale, Brian (CMS/CMCS) phone numbers Friday, April 14, 2017 3:54:41 PM Phone numbers for Cindy and Dennis   Cindy (b)(6)   Dennis (b)(6) HHS-CMS-17-0318-A-000077