In­sur­ers hope­ful as GOP-led states re­con­sider Med­i­caid ex­pan­sion

Modern Healthcare - - NEWS - By Shelby Liv­ingston

Some Repub­li­can-led states are re­think­ing their re­fusal to ex­pand Med­i­caid in the after­math of the failed House ef­fort to bull­doze the Af­ford­able Care Act. In­sur­ers that op­er­ate Med­i­caid plans are see­ing dol­lar signs.

But ex­pan­sion to low-in­come adults con­tin­ues to face re­sis­tance from some GOP gov­er­nors, state law­mak­ers and con­ser­va­tive ad­vo­cacy groups, who say states can’t af­ford it and it cre­ates wel­fare de­pen­dency.

The demise of the GOP re­peal-and-re­place bill po­ten­tially clears a po­lit­i­cal path for the 19 hold­out states to ex­tend cov­er­age to mil­lions of low-in­come adults. Fed­eral fund­ing for ex­pan­sion would have been phased out un­der the House bill, which was yanked by Repub­li­can lead­ers who faced op­po­si­tion from con­ser­va­tive and mod­er­ate mem­bers.

With ex­pan­sion fund­ing safe for now, Kansas, Maine, North Carolina and a few other states are weigh­ing ex­pan­sion of Med­i­caid. That could pro­vide ro­bust mem­ber­ship growth for man­aged- care in­sur­ers, which are see­ing stag­nant en­roll­ment in the in­di­vid­ual and group mar­kets.

If the rest of the states ex­panded Med­i­caid, an es­ti­mated 7.8 mil­lion more peo­ple would en­roll, ac­cord­ing to the Ur­ban In­sti­tute.

That would be great for health plans, said Jeff My­ers, CEO of Med­i­caid Health Plans of Amer­ica, which rep­re­sents Med­i­caid man­aged-care plans that in­clude big Med­i­caid play­ers such as Cen­tene Corp. and Wel­lCare Health Plans, which sell plans in states that pre­vi­ously ex­panded.

The ACA al­lows states to ex­pand Med­i­caid to low-in­come adults up to 138% of the fed­eral poverty level, with the fed­eral gov­ern­ment pay­ing 95% of the cost. The rate would fall to 90% by 2020.

Man­aged-care in­sur­ers have thrived un­der ex­pan­sion. St. Louis-based Cen­tene served 1.1 mil­lion mem­bers in Med­i­caid ex­pan­sion pro­grams across 10 states last year, com­pared with just 449,000 in 2015 and 201,300 in 2014, the first year of ex­pan­sion. Its total Med­i­caid mem­ber­ship reached 6.9 bil­lion in 2016. Cen­tene’s total rev- enue grew to $40.6 bil­lion last year, up from $22.8 bil­lion the year be­fore. The in­surer doesn’t break out rev­enue from its Med­i­caid busi­ness.

Wel­lCare, which also deals mostly in Med­i­caid, grew its Med­i­caid mem­ber­ship 39% from 1.8 mil­lion mem­bers in 2013—be­fore Med­i­caid ex­pan­sion—to 2.5 mil­lion at the end of 2016. Its Med­i­caid pre­mium rev­enue to­taled $9.5 bil­lion in 2016, up 67% from $5.7 bil­lion in 2013.

Af­ter the con­gres­sional bill was pulled, the Kansas Leg­is­la­ture passed a bill to ex­tend cov­er­age to an es­ti­mated 150,000 res­i­dents in the first year. But Repub­li­can Gov. Sam Brown­back, an ex­pan­sion foe, quickly ve­toed the bill, say­ing it’s an “un­wise” move when Congress still wants to dis­man­tle the ACA. He crit­i­cized the bill for not im­pos­ing strict work re­quire­ments for el­i­gi­bil­ity. Law­mak­ers hope to round up a small num­ber of ad­di­tional GOP votes to over­ride Brown­back’s veto, and provider groups are lob­by­ing hold­out law­mak­ers hard.

In Vir­ginia, Demo­cratic Gov. Terry McAuliffe is again push­ing to ex­pand Med­i­caid to more than 430,000 low­in­come res­i­dents. Last week he in­tro­duced a bud­get amend­ment that would give him the author­ity to

ex­pand the pro­gram. The state GOP-led Leg­is­la­ture quickly re­sponded with a state­ment re­it­er­at­ing its op­po­si­tion to ex­pan­sion.

Ge­or­gia, Maine and North Carolina are also eye­ing ex­pan­sion. In Maine, where Repub­li­can Gov. Paul LePage has ve­toed pre­vi­ous ex­pan­sion bills, sup­port­ers got enough sig­na­tures to put the is­sue up for a bind­ing bal­lot ini­tia­tive in the fall. It would cover an es­ti­mated 57,000 res­i­dents.

In North Carolina and Ge­or­gia, ex­pan­sion would ex­tend cov­er­age to an es­ti­mated 624,000 and 791,000 peo­ple, re­spec­tively. North Carolina’s new Demo­cratic gover­nor, Roy Cooper, quickly re­versed his Repub­li­can pre­de­ces­sor’s stance and used ex­ec­u­tive power to ex­pand the pro­gram, but Repub­li­cans have sued to block his ac­tion.

In Ge­or­gia, Repub­li­can Gov. Nathan Deal is seek­ing a waiver to ex­pand Med­i­caid with el­i­gi­bil­ity re­stric­tions.

Still, pass­ing ex­pan­sion is an up­hill bat­tle in most GOP-led states, due to pow­er­ful ide­o­log­i­cal op­po­si­tion. In Vir­ginia, “I just don’t see any way it’s go­ing to hap­pen,” said Ge­of­frey Skel­ley, a po­lit­i­cal an­a­lyst at the Univer­sity of Vir­ginia’s Cen­ter for Pol­i­tics. “It’s amaz­ing to me that Kansas was even close to ex­pand­ing it.”

But sev­eral red states have em­braced Med­i­caid ex­pan­sion af­ter see­ing that it leads to bet­ter health out­comes for low-in­come res­i­dents, less un­com­pen­sated care at hos­pi­tals, and sig­nif­i­cant state bud­get sav­ings, said Deb­o­rah Bachrach, a part­ner at Manatt Health and for­mer Med­i­caid di­rec­tor of New York.

Ex­pan­sion states mostly moved the added ben­e­fi­cia­ries into pri­vate man­aged-care plans, My­ers said. Those con­tracts are lu­cra­tive. In­di­ana last year awarded man­aged-care con­tracts to An­them, Cen­tene, CareSource and MD­wise. The con­tracts were worth a cu­mu­la­tive $3.3 bil­lion a year and cov­ered 1 mil­lion poor adults and chil­dren.

Margins on Med­i­caid busi­ness are thin, usu­ally be­tween 1% to 3%, said Deep Ban­er­jee, di­rec­tor at S&P Global. That’s be­cause the states and the fed- eral gov­ern­ment, which fund Med­i­caid, have a lot of bar­gain­ing power.

But “if you can add enough mem­ber­ship and man­age the fixed costs go­ing into it, it can be a prof­itable busi­ness,” said Mark Rouck, se­nior di­rec­tor at Fitch Ratings.

There’s still a chance that con­gres­sional Repub­li­cans could make cuts to Med­i­caid. The failed House GOP bill would have phased out the en­hanced fed­eral con­tri­bu­tion that fi­nances Med­i­caid ex­pan­sion start­ing in 2020. It would also have con­verted Med­i­caid to a capped per capita pay­ment sys­tem in 2019.

The Con­gres­sional Bud­get Of­fice es­ti­mated that the bill would lead to 24 mil­lion more unin­sured peo­ple than un­der cur­rent law. A big chunk of that—10 mil­lion—would stem from changes to Med­i­caid.

The bill failed in part be­cause of con­cern from ex­pan­sion states, Bachrach said. “It re­ally speaks to the pow­er­ful im­pact ex­pan­sion has had in terms of cov­er­age rates and ac­cess to care. It’s hard for Congress to turn their back on that im­pact.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.