In his latest column for The Wall Street Journal‘s Think Tank, Drew Altman and guest co-author Dana Goldman examine hospital productivity gains, and what they may mean for hospitals’ ability to absorb spending reductions.

All previous columns by Drew Altman are available online.

In his latest column for The Wall Street Journal‘s Think Tank, Drew Altman examines the variation among states beneath the national Affordable Care Act’s Marketplace enrollment numbers released by the U.S. Department of Health and Human Services.

All previous columns by Drew Altman are available online.

In his latest column for The Wall Street Journal‘s Think Tank, Drew Altman discusses why high health care prices are a problem for consumers, but not a cause of renewed growth in health spending.

All previous columns by Drew Altman are available online.

Under the Affordable Care Act (ACA), Medicaid was intended to play a key role in efforts to reduce the number of uninsured by expanding eligibility to nearly all low income adults with incomes at or below 138% FPL ($16,242 per year for an individual in 2015), but the Supreme Court ruling on the ACA’s constitutionality effectively made the expansion a state option. As of February 2015, 29 states including DC have adopted the expansion and in upcoming months, a number of other states will be debating whether to implement the expansion as governors release budgets for state fiscal year 2016 and state legislatures convene.  An estimated 14 million uninsured adults would meet the Medicaid eligibility requirements (based on income, immigration status, and age) if all states had implemented the Medicaid expansion. The estimated 14 million includes adults who were eligible but not enrolled under pre-ACA rules in all states, those made newly eligible in expansion states, and in non-expansion states those in the coverage gap and those with incomes between 100-138% FPL who may now have access to tax credits in the marketplace.One aspect of the uninsured population that could gain Medicaid coverage that is poorly understood is their attachment to the workforce.  As additional states consider whether to implement the expansion, some have raised pursuing waiver authority to tie Medicaid eligibility for adults under the expansion to work requirements.  This fact sheet profiles uninsured adults who could gain Medicaid coverage under the ACA by their relationship to the workforce and job-based coverage.

Most uninsured adults who could gain Medicaid coverage are already working or in a family with a worker.  Nearly three out of four (72%) of the uninsured adults who could gain Medicaid coverage live in a family with at least one full-time or a part time worker and more than half (57%) are working full or part-time themselves.  (Figure 1)  Among the 14 million uninsured adults who could gain Medicaid coverage men and women are evenly split and older adults (ages 46-64) account for nearly one-third (32%).  About half live in states that adopted the expansion and half in states not implementing the expansion.  (Table 1)

Most working uninsured adults who would be eligible for Medicaid are employed by small firms or in industries with low ESI offer rates.  Most uninsured adults who would be eligible for the Medicaid expansion work in firms and industries that often have limited employer-based coverage options. The majority of workers in this group (52%) work for small firms with less than 50 employees that will not be subject to ACA penalties for not offering coverage (Figure 2).  Further, many firms do not offer coverage to part-time workers. A majority of workers targeted for the Medicaid expansion also work in industries with historically low insurance rates, such as the agriculture and service industries. Since the Medicaid expansion was designed to reach low-income adults left out of the employer-based system, it is not surprising that among those who work, most are unlikely to have access to health coverage through a job.

Of the uninsured who could gain Medicaid coverage who were not working, most report major impediments in their ability to work.  Nearly one in three (29%) reported that they were taking care of home or family; 20% reported they were looking for work; 18% were in school; 17% were ill or disabled; 10% were retired, and 6% had another reason.  This is consistent with data that show that fewer women compared to men (53% compared to 60%) and fewer of those in the 46-64 age range compared to younger adults (47% compared to 62% ages 26-45 and 60%  ages 19-25) are working.  Women are more likely than men to care for family and older adults are more likely to have health reasons that would make it difficult to work.  (Figure 3)

In negotiations over the Medicaid expansion, a few states have been interested in using waiver authority to tie Medicaid eligibility to programs.  Federal law does not allow for work requirements in Medicaid, and HHS has stated that waivers that condition Medicaid eligibility on work would not be approved because they do not further the purposes of the program, which are to provide health coverage.  However, proposals that include a referral to work programs (without a condition of Medicaid eligibility) could be approved.  New Hampshire has proposed a work referral program and other states like Indiana and Utah are considering state-run work search and training programs that are separate from the Medicaid expansion.  Data show that most uninsured who could gain coverage are working or in a family with a worker.  Medicaid offers a source of coverage to fill in the gaps faced by low-income workers in low-wage jobs where affordable coverage in the workplace is out of reach and for many who face impediments to work.

As enacted, the Affordable Care Act (ACA) broadened Medicaid’s role, making it the foundation of coverage for nearly all low-income Americans with incomes up to 138 percent of the federal poverty level (FPL) ($16,242 per year for an individual in 2015). However, the Supreme Court ruling on the ACA effectively made the decision to implement the Medicaid expansion an option for states. For those that expand, the federal government will pay 100 percent of Medicaid costs of those newly eligible for Medicaid from 2014 to 2016. The federal share gradually phases down to 90 percent in 2020, where it remains well above traditional federal medical assistance percentage (FMAP) rates. As of January 2015, 29 states (including the District of Columbia) adopted the Medicaid expansion, though debate continues in other states.¹  (Figure 1) State lawmakers have had different responses to the Medicaid expansion. While it does not cover how every state has enacted the Medicaid expansion, this fact sheet highlights some of the different actions state lawmakers have taken in response to the Medicaid expansion. Each state’s circumstances are unique; the actions taken by one state may not apply to another state’s circumstances.

Overview of the Processes Required to Adopt the Medicaid Expansion

Medicaid is a jointly-operated program; state Medicaid agencies must work with Federal partners to adopt the Medicaid expansion. The relationship between the state Medicaid agencies and the Centers for Medicare and Medicaid Services (CMS), the federal agency administering the Medicaid program, is governed by a document called a Medicaid state plan. A Medicaid state plan describes how each state will operate its program, which is submitted to and approved by CMS. To make a change in its Medicaid program, such as adopting the Medicaid expansion, the state Medicaid agency must submit and receive CMS approval of either a state plan amendment (SPA), which is used to make program changes that are allowed under current law, or less commonly a waiver request, which is negotiated agreement involving changes to the operation of the state’s program that are not allowed under federal Medicaid law.²  (Figure 2) To date, 24 of the 29 states that have adopted the Medicaid expansion have done so through filing a SPA; only five states have received Section 1115 waiver approval to implement the ACA Medicaid expansion.³ 

However, before working with federal partners, state Medicaid agencies often must work with state lawmakers to obtain authorization and appropriations before implementing the Medicaid expansion. (Figure 2) In order to make changes to Medicaid policy, such as expanding eligibility under the Medicaid expansion, states must work with lawmakers (governors and/or legislatures) to make changes to either state laws and/or state regulations. Each state has different rules about which kinds of Medicaid policy changes, if any, can be authorized through changes in regulation (and therefore by agencies at the direction of the governor) or must be made through changes to state law or statute (and therefore require legislative approval.) For example, some states require state legislative action before state plan amendments or Section 1115 waiver requests can be submitted by the state Medicaid agency to CMS for federal approval and others do not. States also vary on whether legislative action is required to authorize changes to Medicaid benefits, cost-sharing and other types of Medicaid policy changes.⁴  This varies, at least in part, on how the Medicaid program was incorporated into state statute when the state originally enacted the program decades ago and the changes to rules and regulations enacted in the years since. In addition to authorization, state Medicaid agencies must also work with state lawmakers to obtain appropriations to fund the Medicaid policy change(s). Some states require legislative action to appropriate federal dollars as well as state dollars; others do not.

Examples of State Lawmaker Responses to Medicaid Expansion

State lawmakers play a key role in determining if and how their state may adopt the Medicaid expansion. Both Republican and Democratic state lawmakers have responded in differing ways to the Medicaid expansion; responses have also changed over time. The following sections walk through some of the different ways state lawmakers have responded to the Medicaid expansion.

Standard Legislative Process

Many of the states that have adopted the Medicaid expansion have done so through the standard legislative process – legislation was passed authorizing the Medicaid expansion (either through a stand-alone bill or as part of budget legislation.) For example, Minnesota⁵  and Maryland⁶  passed legislation during their 2013 regular legislative sessions to enact the Medicaid expansion. Other states, such as New York⁷  and New Mexico⁸ , included the Medicaid expansion as part of budget bills passed in 2013. In each of these states, the Governor and legislature supported the Medicaid expansion. The standard legislative process has also worked in some states where adopting the Medicaid expansion was initially supported by one branch but not the other. For example, in Arizona, Governor Brewer strongly supported adopting the Medicaid expansion; after lobbying legislators and building public support, legislators passed the state’s budget with the Medicaid expansion.⁹ 

While Section 1115 waivers require additional steps to obtain federal approval, the legislative process remains largely the same at the state level. The majority of states that have adopted the Medicaid expansion to date have done so within federal rules and options to receive the associated enhanced federal matching funds for newly eligible, in other words, through SPAs. However, a limited number of states have obtained or are seeking approval through Section 1115 waivers to implement the expansion in ways that extend beyond the flexibility provided by the law.¹⁰  While Section 1115 waivers require additional steps to obtain federal approval, the process at the state level may be largely the same at the state level as if the state were adopting the expansion through a SPA. For example, lawmakers in Iowa, New Hampshire and Michigan approved legislation adopting the Medicaid expansion through their standard legislative process. While the legislation outlined their alternative Medicaid expansion requests and conditioned approval on federal waiver approval within a set timeframe, the legislatures delegated development and submission of the final waiver proposal to the state Medicaid agencies. More recently, governors in some states, such as Utah and Tennessee, have instead started negotiations with CMS officials to develop a waiver proposal that is likely to be approved at the federal level. Once a preliminary agreement in principle has been reached, these governors have now started working with their legislatures to obtain their approval before formally submitting the request to CMS.

One branch of government can stop adoption of the Medicaid expansion. State Lawmakers have differed on their support or opposition to the Medicaid expansion. In states such as Missouri and Virginia, Governors Nixon and McAuliffe have also both expressed strong support for the Medicaid expansion, initiating statewide campaigns for adoption of the expansion in their respective states. However, each of these Governors has faced strong opposition from their respective state legislatures; Medicaid expansion has not been adopted in either state at this time. Sometimes, even one body of the state legislature has stopped passage of state legislation adopting the Medicaid expansion. For example, in Florida, Governor Rick Scott announced his support of adopting the Medicaid expansion in February 2013.¹¹  The Senate passed legislation that adopted an alternative Medicaid expansion proposal; however, strong opposition in the House of Representatives prevented final passage of the legislation. ¹²  In other cases, governor opposition to adoption of the expansion has prevented action. For example, in Maine, the legislature has passed multiple bills authorizing the Medicaid expansion, but each has been vetoed by Governor LePage; override votes have fallen short of the two-thirds majority vote needed each time.¹³ 

Some states have enacted laws prohibiting Medicaid expansion without legislative approval. While most states have adopted the Medicaid expansion after agreement has been reached by both governors and state legislatures, some legislatures have sought to ensure that legislative approval is required before adoption of the Medicaid expansion can take effect. In March 2013, Governor McCrory of North Carolina signed legislation that prevented any department, agency or institution of the state from expanding eligibility under the ACA Medicaid expansion in North Carolina unless directed to do so by the General Assembly.¹⁴  Similar stand-alone legislation was also passed in other states such as Georgia¹⁵  and Tennessee.¹⁶  Legislatures in other states, such as Virginia, have included language requiring legislative approval before implementing the Medicaid expansion in state budgets.¹⁷  Similar legislation that would prohibit the Governor or executive agencies from implementing the Medicaid expansion without legislative approval is under consideration in Montana.¹⁸ 

Alternative Processes

In a few select cases, the Medicaid expansion has been adopted through executive action. While enactment of the Medicaid expansion involved the legislature in most states, at least two states enacted the Medicaid expansion through executive order – Kentucky and West Virginia. In May 2013, Governor Beshear of Kentucky and Governor Tomblin of West Virginia issued executive orders enacting the Medicaid expansion in their states.

The need to appropriate federal funds has also raised some challenges in states seeking adoption of the Medicaid expansion. As part of state budget processes, some states require that all funding be appropriated, including that from federal funds. For example, after the Arkansas legislature approved authorizing language for the Medicaid expansion (the Private Option)¹⁹ , the state legislature also had to pass legislation to appropriate the federal dollars that fund the Private Option; all appropriations in Arkansas require a three-fourths majority vote in each chamber, a higher threshold than in most states. ²⁰  Other states delegate appropriation authority in select cases to other government bodies. For example, in Ohio, some spending decisions are delegated to the state’s Controlling Board. The role of the board is to “provide a mechanism for handling limited day-to-day adjustments needed in the state budget,” without requiring the full legislature to meet; over time its role has been also to provide greater legislative oversight of executive action.²¹  After Ohio’s budget for SFYs 2014-2016 passed in June 2013 without appropriations for the Medicaid expansion, the Ohio Medicaid Director submitted a request that the Controlling Board approve the appropriation of federal funds for the Medicaid expansion. The Controlling Board approved the appropriation in October 2013.²² 

Some states have passed legislation that created taskforces or study groups to further examine the issue of Medicaid expansion and make a recommendation to the legislature.  For example, as part of a compromise deal reached by the Governor and the legislature in 2013, Virginia established the Medicaid Innovation and Reform Commission (MIRC); this committee was charged with monitoring the development of Medicaid reform proposals, such as the expansion of managed care among others. If the MIRC determined that specific Medicaid cost-reduction and efficiency benchmarks had been met, it could then vote to implement the Medicaid expansion.²³  However, the committee was later eliminated as part of the FY 2015-2016 budget passed the following year.  Additional legislation establishing study groups or taskforces to examine the Medicaid expansion and broader Medicaid reforms has previously been enacted in a number of states, such as Wyoming; this taskforce recently recommended the SHARE plan, an alternative Medicaid expansion proposal. As in other states, the recommendation of the taskforce is not binding and still requires legislative approval in addition to Governor support before being adopted.

In a few instances, state lawmaker actions adopting the Medicaid expansion have been challenged in court. For example, the executive orders adopting the Medicaid expansion and enacting the state’s Marketplace – kynect – in Kentucky were challenged in court. Eventually the judge upheld the executive order based on existing state law that gave the Secretary of Health and Family Services authority “to take advantage of all federal funds that may be available for medical assistance…the secretary…may by regulation comply with any requirement that maybe imposed or opportunity that may be presented by federal law.”²⁴  A court case has also been brought in Arizona, where state legislators are challenging the budget legislation that enacted the Medicaid expansion. Part of this legislation called for the implementation of a new hospital provider fee to fund state costs of the Medicaid expansion. According to the plaintiffs, which include the State Senate President, Senator Biggs, the fee is a tax, which under Arizona’s constitution, requires two-thirds majority to approve as opposed to the simple majority that approved the legislation.  After the State Supreme Court ruled that the plaintiffs had standing to bring the lawsuit, the case has been referred back to Maricopa County Superior Court.²⁵ 

While discussed in some states, no state has included a ballot initiative on the adoption of the Medicaid expansion. For example, in Montana, supporters of the Medicaid expansion sought to include a ballot initiative on the state’s 2014 ballot. If approved by voters in the state, it would have expanded eligibility under the Medicaid expansion; additional legislative action would have been needed to appropriate the funding.  However, the initiative failed to collect enough signatures and was not included on the ballot.²⁶ 

Conclusion

State lawmaker responses to the Medicaid expansion have differed across states. Most states adopted the Medicaid expansion through the standard legislative process after gaining the support of both branches of state government; however a few states have adopted the Medicaid expansion through alternative processes. Each state’s circumstances are unique; the actions taken by one state may not apply to another state’s circumstances.

1. See Current Status of State Medicaid Decisions, as of January 27, 2015, available at: https://modern.kff.org/health-reform/slide/current-status-of-the-medicaid-expansion-decision/. ↩︎
2. Robin Rudowitz and Andy Schneider, The Nuts and Bolts of Making Medicaid Policy Changes: An Overview and Look at the Deficit Reduction Act. Kaiser Family Foundation, July 2006. https://modern.kff.org/medicaid/issue-brief/the-nuts-and-bolts-of-making-medicaid/. ↩︎
3. Robin Rudowitz, Samantha Artiga and MaryBeth Musumeci. The ACA and Medicaid Expansion Waivers. Kaiser Family Foundation, updated February 2015. https://modern.kff.org/medicaid/issue-brief/the-aca-and-recent-section-1115-medicaid-demonstration-waivers/. ↩︎
4. National Health Law Center and National Association of Community Health Centers, Role of State Law in Limiting Medicaid Changes. February 2008. http://www.nachc.org/client/NHELP-NACHC-St-by-St-Chart-Final.pdf ↩︎
5. H.F. 9, 88th Minnesota Legislature (enacted 2013.) https://www.revisor.mn.gov/bills/bill.php?b=house&f=HF9&ssn=0&y=2013. Governor Mark Dayton, State expands health coverage for 35,000 Minnesotans. (Press Release, Governor of Minnesota,) February 19, 2013. http://mn.gov/governor/newsroom/pressreleasedetail.jsp?id=102-55000. ↩︎
6. H.B. 0228, Maryland General Assembly 2013 Regular Session (enacted 2013.) http://mgaleg.maryland.gov/webmga/frmMain.aspx?pid=billpage&stab=01&id=hb0228&tab=subject3&ys=2013RS. The House Fiscal and Policy Note for this bill indicates that there is “no legal requirement that Maryland enact legislation to participate in the Medicaid expansion…however, all previous expansions of the Maryland Medicaid program have been done through legislation.” Department of Legislative Services, Fiscal and Policy Note Revised: Maryland Health Progress Act of 2013 (House Bill 228.) (Maryland General Assembly,) 2013. http://mgaleg.maryland.gov/2013RS/fnotes/bil_0008/hb0228.pdf. ↩︎
7. A. 03006, New York State Assembly – 2013 Legislative Session (enacted 2013). http://assembly.state.ny.us/leg/?bn=S02606&term=2013. ↩︎
8. H.B. 2, New Mexico Legislature  – 2013 Legislative Session (enacted 2013). http://www.nmlegis.gov/lcs/legislation.aspx?chamber=H&legtype=B&legno=%20%20%202&year=13. ↩︎
9. H.B. 2010, Fifty-first Legislature – Special Session (enacted 2013.) http://www.azleg.gov/DocumentsForBill.asp?Bill_Number=HB2010&Session_ID=111. ↩︎
10. Robin Rudowitz, Samantha Artiga and MaryBeth Musumeci. The ACA and Medicaid Expansion Waivers. Kaiser Family Foundation, updated February 2015. https://modern.kff.org/medicaid/issue-brief/the-aca-and-recent-section-1115-medicaid-demonstration-waivers/. ↩︎
11. Governor Rick Scott, We Must Protect the Uninsured and Florida Taxpayers with Limited Medicaid Expansion. (Office of the Governor,) February 20, 2013. http://www.flgov.com/wp-content/uploads/2013/02/2-20-13-REMARKSFORDELIVERY.pdf. ↩︎
12. CS/SB 1816, Florida State Legislature –Regular Session (not enacted, 2013.) http://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=50869. ↩︎
13. L.D. 1066 “An Act to Increase Access to Health Coverage and Qualify Maine for Federal Funding,” 126th State of Maine Legislature (not enacted, 2013.) http://legislature.maine.gov/LawMakerWeb/summary.asp?ID=280047868 L.D. 1578 “An Act to Increase Health Security by Expanding Federally Funded Health Care for Maine People,” 126th State of Maine Legislature (not enacted, 2014.) http://legislature.maine.gov/LawMakerWeb/summary.asp?ID=280050715. ↩︎
14. S. 4, North Carolina State Legislature – 2013-2014 Session (2013.) http://www.ncleg.net/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=S4. ↩︎
15. H. B. 990, Georgia General Assembly 2013-2014 Regular Session, (2014.) http://www.legis.ga.gov/Legislation/en-US/display/20132014/HB/990. ↩︎
16. H.B. 0937, 108th Tennessee General Assembly (2014.) http://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=HB0937&ga=108. ↩︎
17. After a long protracted debate over the state’s budget bill around the Medicaid expansion, legislators in Virginia passed a budget bill without appropriations for the Medicaid expansion that also included an amendment, proposed by Senator Stanley, to prevent the governor from implementing the expansion on his own authority without legislative approval. Governor McAuliffe signed the budget legislation, but used his line-item veto authority to remove the Stanley amendment along with other items. However, the Speaker of the House later ruled that the line-item veto of the Stanley amendment was outside the Governor’s authority as it did not delete the entire line item but only a portion; the line item in question related to the appropriation for the state’s entire Medicaid program. After the General Assembly voted and approved other line-items vetoes, the budget became law with the Stanley amendment intact. Laura Snyder, Kathleen Gifford, Eileen Ellis and Jenna Walls, Putting Medicaid in the Larger Budget Context: An In-Depth Look at Four States in FY 2014 and 2015. (Kaiser Family Foundation,) October 2014. https://modern.kff.org/medicaid/issue-brief/putting-medicaid-in-the-larger-budget-context-an-in-depth-look-at-four-states-in-fy-2014-and-2015/. ↩︎
18. H.B. 256, Montana Legislature 2015 Regular Session (2015.)  http://leg.mt.gov/css/default.asp. . ↩︎
19. H.B. 1143, 89th General Assembly of Arkansas (2013.) http://www.arkleg.state.ar.us/assembly/2013/2013R/Pages/BillInformation.aspx?measureno=HB1143. ↩︎
20. H.B. 1219, 89th General Assembly of Arkansas (2013.) http://www.arkleg.state.ar.us/assembly/2013/2013R/Pages/BillInformation.aspx?measureno=HB1219 ↩︎
21. “Authority – Actions Related to State Finances & the Budget Arena”. Office of Budget and Management website, Accessed February 10, 2015. http://obm.ohio.gov/ControllingBoard/authority.aspx. Controlling Board Manual. (Ohio Office of Budget and Management,) revised February 2012. http://obm.ohio.gov/ControllingBoard/doc/manual/CB_Manual_2012.pdf . ↩︎
22. “Minutes of the October 21, 2013 Meeting of the Controlling Board.” (Ohio Office of Budget and Management,) Accessed February 2015. http://obm.ohio.gov/ControllingBoard/doc/minutes/CB-minutes_2013-10-21.pdf. ↩︎
23. Medicaid Innovation and Reform Commission, “About the Commission”, (Virginia General Assembly.) Accessed August 2014. http://mirc.virginia.gov/about.html. ↩︎
24. David Adams, et al v. Commonwealth of Kentucky et al, No. 13-CI-605 (Franklin Circuit Court – Division 1, September 3, 2013.) http://www.adea.org/uploadedFiles/ADEA/Content_Conversion_Final/policy_advocacy/Documents/emailDist/5PAGES.pdf Kentucky Revised Statutes (KRS) 205.520 http://www.lrc.ky.gov/Statutes/statute.aspx?id=7700. ↩︎
25. Andy Biggs, et al v. Governor Janice Brewer et al, No. CV-14-0132-PR (Supreme Court of the State of Arizona, December 31, 2014.) http://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2014/CV-14-0132-PR.pdf ↩︎
26. Ballot Issue #14 I-170. Received by Secretary of State January 22, 2014. Accessed February 12, 2015. http://sos.mt.gov/elections/2014/BallotIssues/index.asp. ↩︎

In September 2013, the Centers for Medicare and Medicaid Services approved Arkansas’ Section 1115 demonstration to implement the Affordable Care Act’s (ACA’s) Medicaid expansion by using Medicaid funds as premium assistance  to purchase coverage in Marketplace Qualified Health Plans (QHPs) for newly eligible adults.¹   The demonstration covers parents from 17-138% of the federal poverty level (FPL, up to $16,242 per year for an individual in 2015) and childless adults from 0-138% FPL.  As of January 2014, Arkansas’ demonstration:

• Expands Medicaid by purchasing Marketplace QHP coverage for all newly eligible adults.
• Requires newly eligible adults to enroll in Marketplace QHPs to receive Medicaid services.
• Provides services that are outside the QHP benefit package, such as Early Periodic Screening Diagnosis and Treatment for 19 and 20 year olds, free choice of family planning provider, and non-emergency medical transportation, through the state’s Medicaid fee-for-service delivery system.

In December 2014, CMS approved an amendment to Arkansas’ demonstration, based on changes required by state legislation.²    Previously, Arkansas’ demonstration included cost-sharing at Medicaid state plan amounts at the point-of-service for beneficiaries from 100-138% FPL.  As of January 2015, Arkansas’ amended demonstration:

• Establishes health savings accounts to which non-medically frail beneficiaries from 50-138% FPL make monthly income-based contributions, ranging from $5 to $25 per month, to be used for co-payments and co-insurance. These contributions are not a condition of Medicaid eligibility.
• Imposes cost-sharing at the point-of-service at state plan amounts for beneficiaries above 100% FPL who do not make monthly account contributions.

Arkansas also sought waiver authority to limit non-emergency medical transportation (NEMT) to 8 trip legs per year for non-medically frail beneficiaries.  Instead, the state will establish a prior authorization process for NEMT for newly eligible adults (which does not require waiver authority).

Arkansas is among the 29 states (including DC) implementing the Medicaid expansion to date, most of which are doing so through a state plan amendment.   To date, CMS has approved waivers in Arkansas, Iowa, Indiana, Michigan, and Pennsylvania to implement the ACA’s Medicaid expansion.  New Hampshire has a waiver application pending with CMS, and Tennessee and Utah have proposals pending at the state level.

Other states expanding or seeking to expand Medicaid through Marketplace premium assistance include Iowa (optional for those from 101-138% FPL) and New Hampshire (pending waiver application would change expansion from direct coverage in the state’s Medicaid program to Marketplace premium assistance beginning January 2016).  Additional details about Arkansas’ demonstration are included in Table 1.

1. Ark. Health Care Independence Program (Private Option), CMS Special Terms and Conditions (Sept. 27, 13), available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ar/Health-Care-Independence-Program-Private-Option/ar-private-option-app-ltr-09272013.pdf; see also Ark. Medicaid, Health Care Independence (a/k/a Private Options) § 1115 Waiver – FINAL (Aug. 2, 2013), available at https://www.medicaid.state.ar.us/general/comment/demowaivers.aspx. ↩︎
2. Ark. Act 257, § 17 (Feb. 18, 2014), available at http://www.arkleg.state.ar.us/assembly/2013/2014F/Pages/BillInformation.aspx?measureno=SB111;  Ark. Health Care Independence Program (Private Option) CMS Special Terms and Conditions #11-W-00287/6 (Jan. 1, 2015), available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ar/ar-private-option-ca.pdf. ↩︎
3. Ark. State Plan Amendment #13-0013 MM4 (July 15, 2014), available at http://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/AR/AR-13-0013-MM4.pdf. ↩︎
4. Arkansas Health Care Independence Program (“Private Option”) Approved Evaluation for Section 1115 Demonstration Waiver, (February 20, 2014), available at https://www.medicaid.state.ar.us/Download/general/comment/HCIWEvalStrategy.pdf; CMS approval letter: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ar/Health-Care-Independence-Program-Private-Option/ar-private-option-eval-design-appvl-ltr-03242014.pdf. ↩︎

Charts Examine Savings from Subsidies at Stake in U.S. Supreme Court Case

Cost-sharing subsidies under the Affordable Care Act can substantially reduce deductibles and other cost sharing for people with low incomes purchasing coverage in the federally-facilitated insurance marketplace serving 37 states, a new analysis by the Kaiser Family Foundation finds. These government subsidies, which are also available in plans sold on state-run marketplaces, are different from premium tax credits. Both are at stake in the King v. Burwell case, the lawsuit which the U.S. Supreme Court will hear in March in which the federal government’s authority to provide financial assistance to people who buy insurance in federally-operated ACA marketplaces is being challenged.

The health law requires insurers to offer enrollees with lower incomes variants of their standard silver plans with lower levels of cost sharing. People with incomes less than or equal to 150 percent of the federal poverty level can enroll in a plan with a 94 percent actuarial value; people with incomes between 150 and 200 percent of the FPL can get a plan with an 87 percent actuarial value, and people with incomes between 200 and 250 percent of the FPL can get a plan with a 73 percent actuarial value. A higher actuarial value means less cost sharing. Standard silver plans have an actuarial value of 70 percent.

In a new brief and collection of 36 charts, the Foundation compares cost sharing across standard silver plans and their variants in federally-facilitated ACA marketplaces, examining average deductibles and out-of-pocket limits, as well as copayments and coinsurance for hospital stays, physician visits, emergency room visits, and prescription drugs.

The comparisons show how average cost sharing declines for lower-income enrollees. Among the findings:

In an accompanying analysis with 65 charts, the Foundation examines cost sharing for plans across metal levels (platinum, gold, silver and bronze) for ACA marketplaces in 37 states. The analysis finds considerable variation in plan design, noting that plans offered in the same state and within the same metal level may have very different cost-sharing structures and still reach the same actuarial value.

The Cost of Care with Marketplace Coverage and Cost-Sharing Subsidies in Federal Marketplace Plans can be found at kff.org.

Private insurance plans typically require some form of cost sharing (also called out-of-pocket costs) when enrollees receive a health care service covered by their plan.  These expenses, which are in addition to the amount an enrollee spends on his or her monthly premium, come in a variety of forms:

• Copayments: set dollar amounts for covered services (e.g. $20 per general physician visit);
• Coinsurance: a percentage of the allowed cost covered services (e.g. 20% of the allowed cost for a specialist visit);
• Deductibles: set dollar amounts that enrollees must pay before their plan starts to cover the service or a group of services (e.g. $200 drug deductible before drug coverage begins);
• And, often, some combination thereof.

Insurers use cost sharing to keep down monthly premiums in a couple of ways.  First, cost sharing can directly offset premiums by transferring some of the overall costs from monthly payments to payments at the time medical care is used.  A second way cost sharing has a downward effect on premiums is by decreasing the amount of health care enrollees use: when a charge is required at the point of care, people tend to utilize fewer services.

Cost sharing can also lead to unexpected costs for some enrollees and can be difficult to decipher when shopping for plans or reviewing medical bills.  Although the Affordable Care Act (ACA) requires significantly greater standardization and transparency for individual market coverage than existed before the law went into effect, the answer to the main question on many enrollees’ minds – ‘How much will I spend on health care?’ – is not always straightforward.

This brief shows the cost sharing in plans sold to individuals through Healthcare.gov, with a focus on the variation in the ways plans may set cost sharing for services, such as physician visits, prescription drugs, and hospital stays.

Changes to Cost-Sharing under the Affordable Care Act

The ACA requires new private plans sold to individuals to standardize their coverage and the information they provide to enrollees in a variety of ways:

• New plans (both on and off of the Marketplace) must cover at least a basic set of services called Essential Health Benefits (though cost sharing may apply to these services, this provision helps limit out-of-pocket costs by ensuring that a minimum set of services are covered).
• Certain preventive services, such flu shots and mammograms, must be covered without cost sharing.
• The ACA also sets out-of-pocket limits (which are caps on the amount of annual cost sharing that enrollees may be charged for covered services that are received from in-network providers). In addition, the law does away with annual limits on coverage a plan may pay out.
• New plans are now standardized into “metal” tiers – bronze, silver, gold, and platinum – ranging from most to least potential exposure to out-of-pocket costs. The metal tiers are based on a concept called actuarial value, which is the percent of total costs for all enrollees’ covered services that are paid for by the insurer, on average, as opposed to those costs paid for by enrollees.  For example, a bronze plan has an actuarial value of approximately 60%, meaning that the insurer expects to pay for 60% of total costs associated with covered medical services, and that – as a group – the enrollees would pay for the remaining 40% of total costs through their combined copayments, coinsurance, and deductibles.
• Cost-sharing reductions are available to low-to-moderate income Marketplace enrollees. These cost-sharing subsidies, unlike the more widely known premium tax credit, are only available to people who have incomes between 100 and 250 percent of poverty, and who enroll in a silver plan through the Marketplace.  The subsidies work by increasing the actuarial value of a silver plan to be 73, 87, or 94 percent, depending on income. For the lower-income recipients of these subsidies, their out-of-pocket maximums for silver plans will resemble those of gold or platinum plans.  (Although the ACA originally called for out-of-pocket maximums to be lowered for enrollees with incomes between 250 and 400 percent of poverty, this was unable to be achieved in combination with the prescribed actuarial value requirements and was changed during the regulatory process.)

An important note is that each of these changes to cost sharing from the ACA, including the calculation of actuarial value, only applies to services offered by in-network providers.  Insurers may require enrollees to pay significantly more for out-of-network providers, and plans are not required to offer a cap on expenses enrollees may incur for out-of-network care.  Some plans offered on the marketplaces may have limited networks, which only include a limited number of hospitals or physicians in the network.

The ACA requires insurers to make publically available a consumer-friendly, standardized document called a Uniform Summary of Benefits and Coverage (SBC).  The SBC summarizes each product’s required cost sharing for in-network and out-of-network services, and is intended to be standardized in a way that allows people shopping for a plan to make “apples-to-apples” comparisons.

Cost-Sharing in Marketplace Plans

Even with this move toward standardization, Marketplace plans still vary quite a bit.  Plans offered in the same state and within the same metal level may have very different cost-sharing structures.  This is in part because there are many ways plans can set cost sharing and still achieve a given actuarial value.

This analysis looks at the variation in Marketplace products offered in 2015 within and across metal levels.  As the source of the data is Healthcare.gov, this analysis is limited to plans sold to individuals in the 37 states with a federally facilitated or partnership Marketplace (including New Mexico, Oregon and Nevada).  The data were de-duplicated so that each unique product was only counted once per state, and we excluded child-only and catastrophic plans. (Catastrophic plans are essentially identical in their cost-sharing structures).  We do not include cost-sharing reduction plans in this analysis; we will be looking at those plans in a separate brief.

The analysis relies on data downloaded through Healthcare.gov.  In the course of doing this analysis, we found instances where the summary descriptions of cost sharing did not necessarily match information in the plan brochures and SBCs. We did not attempt to verify each description and did not alter any of the information from the downloaded file, which means that some of the plans may be misclassified for certain cost sharing provisions.

Deductibles

Aside from the premium, deductibles are one of the main features that consumers look to when shopping for a health plan. The majority of bronze plans and many silver plans have what are called “combined” deductibles, meaning that there is a single deductible for both medical services and prescription drugs.  The plan typically will not begin covering most medical or prescription services until the deductible has been met (though many health plans do not apply the deductible toward certain services).

Medical and Prescription Drug Deductibles

Most silver, gold, and platinum plans, however, have separate medical and drug deductibles (or, in some cases, have no deductible for prescriptions).  Enrollees in plans with separate deductibles will begin to receive payment towards their prescriptions once they meet their prescription deductible (or immediately if there is no deductible) even if they have not yet met their medical deductible.  Conversely, if an enrollee in one of these plans meets their medical deductible, the plan would then start covering medical services even if the enrollee had not yet reached the drug deductible. In plans with separate medical deductibles, the average bronze deductible is $5,372 and the average platinum deductible is $418 (including many plans with $0 medical deductibles).

Many silver plans with separate deductibles (54 percent) and most gold and platinum plans with separate drug deductibles (61 and 69 percent, respectively) have $0 drug deductibles and therefore begin to pay toward prescriptions immediately.  The average prescription drug deductible amounts (including plans with a deductible of zero dollars) range from $133 in platinum plans to $465 in bronze plans.

Separate Drug Deductibles

Inpatient Facility Stays

Most plans have some form of cost sharing that applies when an enrollee enters the hospital as an inpatient. This can be one of the more confusing areas of cost sharing, primarily due to the interaction between the cost sharing for the hospitalization and any general medical deductible the plan may have.  Some plans are fairly clear: an enrollee must meet the general medical deductible before any costs for a hospitalization are covered, after which the enrollee may have no additional cost sharing or may have to pay a portion of any costs above the deductible amount.  In these arrangements, coinsurance is the most typical form of additional cost sharing.

Other plans are more complicated.  Some plans do not apply the general medical deductible to inpatient hospital stays, but have a separate deductible or sizeable copayment that applies to the hospital stay. A copayment may be per stay (i.e., on payment per admission) or it may be assessed for each day of the stay, typically up to a maximum number of days (e.g. $600 per day for up to three days). The patient then often must pay a portion of the additional costs above their separate deductible or copayment, typically in the form of coinsurance.  In addition, there are plans that only apply a coinsurance percentage to inpatient hospital stays.

Inpatient Facility Cost Sharing

In the charts, plans with coinsurance and copayment amounts include plans that apply a general medical deductible to inpatient hospital and those that do not because we are unable to separate the cases accurately.

Inpatient Physician Services

In many plans, enrollees are required to pay a percentage of the cost of physician services that they receive in a hospital through coinsurance.  In many of these cases the enrollee must first meet the general medical deductible and then pay a portion of the additional costs through coinsurance.

In a large share of plans, the cost sharing for inpatient physician services is the same as for inpatient facility services, for example, each may require the enrollee to pay a coinsurance rate after the general medical has been met. Differences generally occur in plans that have a copayment for inpatient hospital services; in these plans the cost sharing for inpatient physician services may to be coinsurance or no charge, and the enrollee may need to first meet the general medical deductible.

Inpatient Physicians Cost Sharing

Physician Office Visits

Most plans require enrollees to pay cost sharing when they visit a physician’s office, other than certain preventive care visits where cost sharing is prohibited.  Most plans require a copayment when enrollees have a primary care or specialist office visit.  Coinsurance is much more common among bronze plans (24%) than in within the other metal levels.

Many plans require enrollees to first meet the general medical deductible before any payment is made toward office visits.  Some plans will pay toward a small number of (e.g., 3) office visits before an enrollee has met the general medical deductible, but then do not make payments towards additional office visits until after the general medical deductible has been met. Many of these plans require that the enrollee pay a copayment toward the cost of the limited number of covered visits before the deductible has been met, and to pay coinsurance towards the cost of visits that occur after the deductible has been met.

Specialist and Primary Care Physician Office Visits

Emergency Room Visits

There is a mix of cost-sharing approaches for emergency room visits, which in some ways resemble the cost sharing for inpatient hospital stays.  Many plans use either a copayment or coinsurance, and in some of these cases there is no coverage until after the general medical deductible has been met.  Other plans have both a copayment and coinsurance for an emergency room visit; in some of these plans the general medical deductible does not apply, but enrollees must pay a specified copayment and coinsurance for a portion of the costs above the copayment.

Emergency Room Cost Sharing

Prescription Drugs

As mentioned above, plans also vary in how deductibles apply to prescription drugs.  Some plans apply the general medical deductible to prescriptions, which means that no payments are made for prescriptions until an enrollee has met his or her medical deductible.  Other plans have a different (generally lower) deductible that applies specifically to prescriptions, while some have no deductible and begin paying toward prescriptions right away. Bronze plans are more likely to have a general medical deductible that includes prescriptions while plans in the other three metal levels are more likely to have separate prescription drug deductibles (or no deductible for prescriptions).

Most health plans in three or four different groupings, or tiers.  The tiers reflect where the drug is on the health plan’s drug list, or formulary.  Most plans have at least three tiers: generic drugs, preferred brand-named drugs, and non-preferred brand-named drugs. Many plans also have a fourth tier for specialty drugs (e.g., injectable drugs).

Prescription Drug Cost Sharing

The amount and type of cost sharing within plans varies across these drug tiers.  Generally, enrollees face lower cost sharing for generic and preferred brand-named drugs and higher cost sharing for non-preferred brand-named drugs and specialty drugs.  Plans will have different cost-sharing requirements for drugs on different tiers either to encourage enrollees to use lower cost alternatives or to pass on more of the cost of some drugs.  There are plans with copayments and plans with coinsurance in each drug tier; copayments are more common for generic drugs. Some plans have no additional cost sharing once an enrollee meets the applicable deductible.

The level of cost sharing also varies across the metal tiers of plans:  for example copays are likely to be higher in bronze plans than in more expensive plans for each of the drug tiers (in plans that require copayments, the average copayment amount for preferred brand-named drugs is $63 for bronze plans, $47 for silver plans, $37 for gold plans, and $28 for platinum plans).

Out-of-Pocket Maximums

An out-of-pocket maximum is the maximum dollar amount that an enrollee is required to spend on covered services received from network providers in a year.  After an enrollee meets the out-of-pocket maximum, the plans pays 100% of covered services.  Health plans sold in the Marketplace must have an out-pocket maximum for in-network services of no more than $6,600 for an individual plan and $13,200 for a family plan.  Almost all plans offered on the exchange have a combined out-of-pocket maximum for medical and prescription drugs.  Twenty-eight percent of Bronze plans and 22% of Silver plans have an out-of-pocket maximum for single coverage at the $6,600 limit.

Out-of-Pocket Maximums

Discussion  

Many provisions of the Affordable Care Act, including the requirement that plans cover essential health benefits and limits on out-of-pocket maximums, have increased standardization among health plans.  Plans also are now required to meet specific actuarial value targets known to consumers through the plan’s metal level.  Even with these provisions, there is still considerable variation in the design of plans being offered on the federal marketplace, and plans in the same metal level may have significantly different cost sharing for the same service in the same area.  Plans may take very different approaches and still reach the same actuarial value: for example, some plans have large deductibles with little cost sharing after the deductible has been met while others have no or small deductibles but require patients to pay a substantial percentage of the cost at the point of service through high coinsurance rates.  Other plans are in the middle, having both deductibles and meaningful copayment or coinsurance requirements.

Given the difference in plans, enrollees may prefer some plans designs over other designs, based on their health needs and the types of services they feel they may use.  Enrollees also need to think about how they would pay for the required cost sharing should they become seriously ill; in other words, can they afford to pay the maximum out-of-pocket amount required by their plan. It is important that enrollees consider the cost of using their plan as well as the premium when they are shopping for coverage.

Methods

Data were downloaded from the Data.Healthcare.gov 2015 QHP Landscape file, “Health plan information for individuals and families” on [January 26, 2015].  Plans analyzed include those offered in 2015 in the 37 states using Healthcare.gov (which includes federally facilitated and partnership Marketplaces, including Oregon, New Mexico and Nevada).

Child-only and catastrophic plans were removed, and the remaining unique records (those with identical plan marketing names and cost-sharing structures) were collapsed by state, thereby removing duplications where the same plans are offered in multiple counties within the state. The analysis does not include variations on cost sharing made available through cost-sharing reductions for lower income enrollees and Native Americans.

The analysis relies on data downloaded through Healthcare.gov.  In the course of doing this analysis, we found instances where the summary descriptions of cost sharing did not necessarily match information in the plan brochures and SBCs. We did not attempt to verify each description and did not alter any of the information from the downloaded file, which means that some of the plans may be misclassified for certain cost-sharing provisions.

Averages are simple averages and not weighted by enrollment as plan-level enrollment data are not publicly available.