New Report Lists 7 Ways States Can Encourage Health Coverage Leveraging Public Funds

With health policy increasingly transferring to the state level, what’s the most effective way for states to cover the majority of their population through affordable health insurance leveraging public funds? On a day when the Trump administration unveiled 4 ways states can request Section 1332 waivers, some of which are aimed at avoiding key parts of the Affordable Care Act (ACA), an advocacy organization released its own proposal to cover more of the uninsured and lower health insurance costs.

Families USA said it was creating The National Center for Coverage Innovation (NCCI) to help policymakers and consumer leaders expand and improve health coverage. It noted 7 ways that states can innovate to help lower premiums and cut costs. The report, Innovative Options to Cut Health Insurance Costs by Expanding the Circle of Coverage, focuses on reducing uncompensated hospital care, so that private insurers don’t raise premiums on those with employer-sponsored coverage or other private coverage.

The announcement came a day after CMS projections for those who enrolled in ACA coverage in the latest week showed that a drop, compared with last year.

“With exchange enrollment declining nationally, and the number of uninsured children increasing for the first time in years, the report shows how states can reverse these worrisome trends to expand rather than contract the circle of people with high-quality, affordable health insurance,” a statement from the organization said.

Families USA cited the administration’s altering of the insurance market by allowing health plans in the exchange that do not have to cover all benefits, such as prescription drugs or maternity care, or which allow discrimination against consumers with preexisting conditions.

The organization said coverage could be improved across states in the following ways:

Implement a Medicaid buy-in policy that lets consumers with incomes too high for Medicaid enroll in substantially more affordable insurance. States could use 1332 waivers to allow consumers with incomes too high for Medicaid to enroll in the program using premium tax credits (PTCs). However, this would violate Section 1332’s deficit neutrality requirement, which forbids waivers that increase total federal spending. To get around that, the report cited an approach from New Mexico that increases enrollment more gradually through multiple steps over a number of years.

Supplement federal financial assistance with extra help for paying premiums and lowering deductibles and other cost sharing.

The report cited Massachusetts, where state aid eliminates deductibles for consumers with incomes up to 300% of the federal poverty level (FPL), eliminates premiums for those up to 150% of FPL, and reduces premiums for consumers between 150 and 300% of FPL below levels charged in the exchange.

Such strategies improve the risk pool by including younger and healthier adults, the report said. However, the report noted that Masachusets used a Medicaid waiver called Section 1115, the terms of which have since been changed by the Trump administration. States wanting to do something similar would have to raise funds in other ways, such as through the use of general funds, raising tobacco taxes, or taxing nonprofit healthcare institutions that have collected large surpluses.

Implement the ACA’s Basic Health Program (BHP) option, through which consumers with incomes below 200% of FPL receive state-contracted coverage, rather than marketplace insurance. Both New York and Minnesota used this option to expand coverage.

Provide assistance, education and outreach to help consumers obtain and retain ACA coverage. Under the current administration, the ACA marketing budget for the current open enrollment period, which ends in 2 weeks, have been slashed to $10 million. That’s down from $63 million in 2017.

Use state income tax filing to make automatic enrollment possible for consumers who are eligible, but uninsured. The report noted that 73% of those who were uninsured before the ACA’s passage and who became eligible for insurance affordability programs under the ACA live in tax-filing households, including 88% of such uninsured who qualify for PTCs. States could create special enrollment periods (SEPs) to allow marketplace sign-up during tax season.

“Given the political stalemate on these issues at the federal level, state leadership in moving forward on coverage is paramount,” said Jonathan Gruber, Ford Professor of Economics at the Massachusetts Institute of Technology and director of the Health Care Program at the National Bureau of Economic Research, in a statement. “This new institute can provide exactly the kind of key creative thinking, technical support and advocacy that states need as they tackle these vital yet difficult issues."