Idaho is odd. It is a Republican tri-fecta state. It runs its own state based Exchange for the ACA. It has not expanded Medicaid. It has a pair of fascinating waivers that they want to submit to the Center for Medicare and Medicaid Services.
The first waiver is a Section 1115 Medicaid Waiver. They are not asking for an ACA Medicaid Expansion. Instead, they are asking for the authority to create a high-risk pool in Legacy Medicaid for about 1,500 people who have certain severe, high-cost conditions including hemophilia, cystic fibrosis, and certain cancers. These folks would see lower cost sharing and lower premiums. Idaho would pay their normal state match. Cost of care would go down as Idaho pays their Medicaid providers roughly 95% of Medicare rates and Medicare tends to pay providers significantly less than commercial rates.
The objective is to pull a small number of chronically ill and very expensive people out of the ACA individual market risk pools. With those people out of the risk pool, average claims costs go down by 19% which makes insurance a whole lot cheaper for non-subsidized buyers. This makes the non-subsidized market better off as a lot of people who are reasonably healthy and currently deterred from buying because the plans are too expensive will see cheaper plans. This would lead to more people covered and an even healthier risk pool.
If this was the only waiver, it would be a good waiver. However, Idaho is more ambitious. They are also planning a 1332 waiver that will allow people under 100% Federal Poverty Level (FPL) (<$12,060 for an individual) to claim that their income is actually 100% FPL and thus qualify for Advanced Premium Tax Credits and CSR Silver plans. This is a back-door Medicaid-esque expansion along the Arkansas Model but with the Federal government and the individual paying all of the cost without the state needing to commit new money to the coverage expansion.
Idaho wants to use the savings from pulling out the patients with high cost chronic diseases to fund the state pass-through amount for this 1332 waiver. It is an elegant solution if one starts with an assumption that Medicaid Expansion is politically non-viable in Idaho. It will lead to roughly half the currently uncovered population who are in the Medicaid gap to receive coverage. I am concerned that this cohort will be sicker and more expensive than the people who don’t buy this coverage but earn under 100% FPL. I am not sure how this would play with the risk pool improvement from more non-subsidized buyers entering the market. The signs are in opposition to each other but I don’t know magnitude.
I have mechanical worries about these waivers. I don’t think that the initial financial estimates are fully accounting for how CMS scores waivers. We know from Iowa that CMS will count the loss of individual mandate penalties against a state’s budget neutrality calculation. I don’t know if CMS will allow the sequencing that Idaho needs for budget neutrality. I think that this type of waiver is innovative and creative. It solves several problems but the mechanics are tough under the 2015 Section 1332 guidance. Here is a where an Alexander-Murray waiver modification could make a lot of sense.
I am intrigued by what Idaho is trying to do. I am just not sure that they will be allowed to do what they want to do or at least receive as much money as they think they should receive to do what they want to do.
dogwood
I’m the regular Idahoan in the house. I don’t pipe up much on the rare occasion the state gets mentioned in comments. It’s a good state for liberals to poke fun of. The State legislature is the reddest in the Union, yet we’ve been able to avoid the draconian laws that many other states have passed the last decade or so. Transvaginal probes died in the Senate here. The state voter id law isn’t really burdensome. We never had gay marriage on the ballot. Creationism in the schools hasn’t really reared its head as part of the legislative agenda in a serious way. So it’s a weird state. We also have what many consider to be the gold standard of public employee retirement systems. Taking the Medicaid expansion would have saved these Republicans a lot of time and energy, but I can’t deny that they have been pretty serious since the get-go about setting up exchanges and continually working to make the system more effective.
Brad Flansbaum
Dave
Question. Given Medicaid policy varies state to state, who in on the hook for these 1500 when they blow through any attachment points or $200K caps. In the end, savings is a shift. If this small number drop the x-change premiums by 19% and save mainstream enrollees a ton, by definition, they carry heavy, heavy, costs.
Brad
David Anderson
@Brad Flansbaum: The savings is shifting the price per unit from commercial rates to Medicaid rates, so mainly it is taking income out of providers’ pockets on net.
I don’t think there are income/benefit caps in the 1115 waiver application. Idaho would be on the hook for a million dollar claim.
Yutsano
@dogwood: Butch is part of that odd duck cohort. It’s almost like the extremism that comes from Sandpoint doesn’t want to spread to the whole state. Which considering the large Mormon population is understandable. Mormons are usually Republicans, but they are also interested in governing.
dogwood
@Yutsano:
I said here before it’s better to be governed by Mormons than evangelicals if you are in a red state.
Brachiator
I keep seeing some conservatives, e.g., Charles Krauthammer, suggest that high risk pools should be part of any national health insurance plan. While I see that this might help produce lower costs for other people, I’m not sure I see how this affects the total amount that would have to be spent for health care, or whether there would be any overall net benefit.
Brad Flansbaum
@David Anderson:
By definition of the population of this though, wouldn’t the group carry some major costs–that state will still be on the hook for. Medicaid may pay providers less, but its only a matter of degrees for outlier hemophilia and CF patients like the ones we are talking about..
David Anderson
@Brad Flansbaum: Yep, the state of Idaho is projecting that they are kicking in ~$16 million/year for incremental additional Medicaid expenses. There is serious money involved for a small state.
Anne Paulson
“This is a back-door Medicaid-esque expansion along the Arkansas Model but with the Federal government and the individual paying all of the cost without the state needing to commit new money to the coverage expansion.”
How is this not “We want to expand Medicaid but we don’t want to pay for it”? Why would CMS go along?