Does Andy Slavitt Know Anything about Medicaid?

The debate on health care has seen numerous examples of hyperbolic rhetoric in recent months. But one series of allegations made earlier this month takes the cake, both for its factual ignorance and logical incoherence. That these demonstrably false allegations were made by a former senior official in the Obama administration makes them that much more disconcerting.

While many Americans were enjoying a long Independence Day weekend, former acting administrator of the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt took to Twitter to make the bold claim that Republicans were changing their health-care bill “not just to gut Medicaid, but to allow states to eliminate it.”

Moreover, Slavitt’s allegation reflects not just ignorance of fundamental constitutional principles, but the history of Medicaid itself. Arizona did not join the Medicaid program until 1982, 17 years after Medicaid’s creation, and nearly a decade after every other state joined the program. If, as Slavitt claims, Republicans are concocting some nefarious plot to “allow” states to “eliminate” Medicaid, then why did a Democratic Congress “allow” Arizona not to join Medicaid for nearly two decades after the program’s creation? Again, his allegations are, in a word, nonsense—because he either does not know, or does not wish to know, how Medicaid works.

These Waivers Ain’t New, Buddy

As Slavitt’s general claim is outlandishly ignorant, so too the details supposedly bolstering his assertions. Specifically, he claims that “the new state waiver process in the Senate bill already allows Medicaid to be replaced by giving [people] a subsidy.” Setting aside the question of whether giving some Medicaid beneficiaries access to private insurance coverage represents good policy, this claim likewise lacks any factual basis—because the waiver program he mentions has nothing to do with Medicaid.

Slavitt’s claim about a “new state waiver process” references Section 207 of the Senate bill (pages 138-145 here). That language doesn’t create a “new” state waiver process; rather, it amends an existing waiver program created by Section 1332 of Obamacare. Under Section 1332(a)(2) of the law, states can only use the innovation program to waive specific requirements: 1) the individual mandate to purchase coverage; 2) the employer mandate to offer coverage; 3) subsidies for exchange coverage, which states can take as a block grant and distribute to their citizens through other means; and 4) some insurance regulations, such as the definition of a qualified health plan, essential benefits, and actuarial value requirements (see page 98 here). While the Senate bill would change the way states could apply for waivers, it would not change what provisions states could waive.

Credibility: Shot

While at CMS, Slavitt ran an organization which, as the New York Times noted, “finances health care for one in three Americans and has a budget bigger than the Pentagon’s.” For that reason, there’s no other way to say it: Given the number of false statements in Slavitt’s Medicaid Twitter rant, he is either grossly misinformed about how Medicaid operates—in other words, he was never competent to run such a large organization in the first place—or he’s flat-out lying to the American public now.

Either way, his statements deserve much more scrutiny than they’ve received from an otherwise fawning press. Instead of writing pieces lionizing Slavitt as an Obamacare “rabble-rouser,” analysts should focus more on his misstatements and hypocrisy—his apparent failure to go on Obamacare himself while running the law’s exchanges, and his attacks on Republican plans to cap Medicaid spending, even though Obamacare did the exact same thing to Medicare. The American people deserve an honest, serious debate about the future of health care in our country. Unfortunately, they’re not getting it from Andy Slavitt.

This post was originally published at The Federalist.

Liberals’ Medicaid Alarmism

The Senate health care bill is dead, and that’s at least in part due to overheated rhetoric from the left about Medicaid. Many of the over-the-top claims lacked important facts or context, and seemed primarily designed to scare people rather than prompt civil debate.

For instance, liberals claimed that Republican plans to reduce the growth of Medicaid spending by nearly $800 billion in the next decade would “unravel” the program, as Clinton administration labor secretary Robert Reich put it. Yet Obamacare did nearly the exact same thing to Medicare. Obamacare reduced Medicare spending by $716 billion, according to a 2012 Congressional Budget Office estimate. And it did so not to improve Medicare’s ability to pay for care for the next generation of seniors, but instead to fund new Obamacare entitlements.

The liberals who claimed this year’s Republican health bills would “cut” Medicaid are the same ones who endorsed Obamacare’s reductions in Medicare spending. Just look at AARP’s framing of the issue: When Democrats reduce Medicare spending by hundreds of billions of dollars, the organization calls it “taking steps to reduce waste, fraud, abuse, and inefficiency.” But when Republicans reduce Medicaid spending by roughly equivalent amounts, AARP decries “unsustainable cuts” to the program.

Likewise the issue of caps on spending. A group of health care advocacy organizations sent a letter to Capitol Hill last month expressing “grave concern about potential changes to the fundamental structure and purpose of Medicaid,” saying they “vehemently oppose converting Medicaid’s funding into a capped financing structure.”

But this objection to capped payments also seems ironic at best, and disingenuous at worst. Section 3403 of Obamacare imposed per capita caps on Medicare spending, to be enforced by the Independent Payment Advisory Board — a group of unelected bureaucrats. So why did many of the same organizations who claim they “vehemently oppose” capped funding for Medicaid, endorse a health care bill that created the same funding structure for Medicare? Is it because a Democratic president proposed the former change, and a Republican Congress is debating the latter?

Then there’s the alarm raised by Andy Slavitt, a former head of Medicare, Medicaid and the Affordable Care Act during the Obama administration. He recently claimed that Republicans had a secret plan “not just to cut Medicaid, but to allow states to eliminate it.” He said a “new waiver process” in the Senate bill — really a modification of an existing Obamacare waiver — would allow states to transfer Medicaid beneficiaries to private coverage, thereby allowing them to “eliminate” Medicaid.

Yet the Obamacare waiver process explicitly prohibits changes to Medicaid — and the Senate bill would not have changed that. In addition, states have always had the ability to “eliminate” Medicaid; the federal government can’t force states to participate in the program. That’s why Arizona didn’t join until 1982, nearly two decades after Medicaid’s creation. States have remained in Medicaid because the federal government provides significant funding to them for their programs — and that funding would continue to rise, albeit more slowly, under both the House and Senate bills.

To be sure, both sides have exhibited their share of political opportunism. Republicans shouldn’t have attacked Obamacare’s Medicare savings as “cuts” — a reduction in projected growth rates should never be considered a “cut” in government spending. And conservatives were guaranteed to reap the political whirlwind sooner or later.

But the left’s hyperbolic rhetoric, coupled with some pretty apparent hypocrisy, not only helped kill the Senate health bill. It did the American people a disservice by detracting from the debate on health care that our country deserves.

This post was originally published at USA Today.

Another Insurer Bites the Obamacare Dust

Late Monday evening, health insurer Aetna confirmed a major pullback from Obamacare’s exchanges for 2017. The carrier, which this spring said it was looking to increase its Obamacare involvement, instead decided to participate in only four state marketplaces next year, down from 15 in 2016. Aetna will offer plans in a total of 242 counties next year — less than one-third its current 778.

Coupled with earlier decisions by major insurers Humana and UnitedHealthGroup to reduce their exchange involvement, Aetna’s move has major political and policy implications:

Exchanges are in intensive care
Insurers have lost literally billions selling Obamacare policies since 2014. One estimate found that insurers suffered $4 billion in losses in 2014; other studies that suggest carriers lost the same amount last year as well. And these multi-billion-dollar losses come after taking into account two transitional programs that have used federal dollars to protect insurers — programs that will end this December 31.

Over the weekend, in a report on premium increases for 2017, the New York Times noted that for one Pennsylvania health plan, nearly 250 individuals incurred health-care costs of over $100,000 each — “and then cancelled coverage before the end of the year.” While the administration has proposed some minor tweaks to minimize gaming the system, they will not solve the underlying problem: It takes tens of thousands of healthy enrollees to even out the health costs of 250 individuals with six-figure medical expenses, and Obamacare plans have failed to attract enough healthy individuals.

An opening for Trump?
The Wall Street Journal noted that the Aetna’s pullback means that some areas in Arizona now have no health insurers offering exchange coverage. Individuals there who qualify for insurance subsidies will have nowhere to spend them.

President Obama faced a self-imposed crisis in the fall of 2013 when millions of Americans faced a double whammy: Cancellation of their pre-Obamacare policies was coupled with much higher premiums for exchange coverage to replace it. Hillary Clinton could face an eerily similar dynamic in the weeks just before November 8. It remains to be seen whether Donald Trump’s campaign can capitalize on this potential October surprise hiding in plain sight.

Hillary has a problem
Over and above the obvious political problem that the exchanges present between now and November, their dire situation poses a policy quandary that a potential President Clinton would have to address — and fast — on taking office. Her campaign has proposed increasing federal subsidies for those affected by high out-of-pocket costs. But subsidies to individuals will matter little if insurers will not participate in exchanges to begin with.

So how would Hillary Clinton solve the exchange problem? Would she endorse a bailout of the insurers that liberals love to hate? Conversely, if Republicans retain control of at least one house of Congress, how on earth could she enact a government-run health plan that Barack Obama could not pass with huge, filibuster-proof majorities in both chambers? How would a President Clinton get out of the box that her predecessor has gift-wrapped for her?

Will conservatives stand fast?
As I previously noted, Aetna’s “solution” to the exchange problem is simple: Place taxpayers on the hook for their losses — in short, a permanent taxpayer bailout. But given the billions of dollars that insurers have already lost even after receiving tens of billions in corporate welfare from the federal government, Congress will, we should hope, exercise the good judgement not to throw good money after bad.

No Republican voted for Obamacare in either the House or the Senate — and for good reason. The poor design of its health-insurance offerings has ensured that only very sick individuals, or those qualifying for the richest subsidies, have signed up in any significant numbers. No small legislative changes or regulatory tweaks will change that fundamental dynamic. The question is whether, having seen their predictions proven correct, Republicans will seize defeat from the jaws of victory and view a Hillary Clinton victory as meaning they need to “come to terms” with a law that has destabilized insurance markets across the country. Here’s hoping that sale proves as elusive for Mrs. Clinton as Obamacare itself has been to insurers.

This post was originally published at National Review.

SCHIP Enrollment

Background:  The State Children’s Health Insurance Program, established under the Balanced Budget Act (BBA) of 1997, is a state-federal partnership originally designed to provide low-income children with health insurance—specifically, those children under age 19 from families with incomes under 200 percent of the federal poverty level (FPL), or approximately $40,000 for a family of four.  States may implement SCHIP by expanding Medicaid and/or creating a new state SCHIP program.  In addition, states may expand eligibility requirements by submitting state plan amendments and/or Section 1115 waiver requests to the Centers for Medicare and Medicaid Services (CMS).[1]  SCHIP received nearly $40 billion in funding over ten years as part of BBA, and legislation recently passed by Congress in December (P.L. 110-173) extended the program through March 2009, while providing additional SCHIP funds for states.

One concern of many conservatives regarding the SCHIP program relates to crowd-out—a phenomenon whereby individuals who had previously held private health insurance drop that coverage in order to enroll in a public program.  The Congressional Budget Office (CBO) analysis of H.R. 3963, a five-year SCHIP reauthorization which the President vetoed (and the House failed to override), found that of the 5.8 million children who would obtain Medicaid or SCHIP coverage under the legislation, more than one-third, or 2 million, would do so by dropping private health insurance coverage.

In order to prevent policies that encourage crowd-out, and ensure that SCHIP funds are more effectively allocated to the low-income beneficiaries for whom the program was created, CMS on August 17, 2007 issued guidance to state health officials about the way it would evaluate waiver proposals by states to expand their SCHIP programs.  Among other provisions, the letter stated that CMS would require states seeking to expand coverage to children with family incomes above 250% of FPL must first enroll 95% of eligible children below 200% of FPL, consistent with the original design and intent of the SCHIP program.  Congressional Democrats have introduced both a bill (H.R. 5998) and a joint resolution of disapproval under the Congressional Review Act (S. J. Res. 44) designed to repeal the Administration’s guidance.

Enrollment of Wealthier Children:  An analysis performed by the Congressional Research Service (CRS), using data provided by the Centers for Medicare and Medicaid Services (CMS), provides some indication of the extent to which states are focusing their efforts on enrolling poor children first before expanding their SCHIP programs up the income ladder.  Comparison of Fiscal Year 2006 and 2007 data reveal that in FY06, an estimated 586,117 children from families with incomes above 200% of the federal poverty level—approximately $41,000 for a family of four—were covered under SCHIP by a total of 15 states.

By contrast, in FY07, a total of 17 states and the District of Columbia covered an estimated 612,439 children in their SCHIP programs—an increase of nearly 30,000 children from wealthier families.  Much of this increase stems in part from decisions by three states—Maryland, Missouri, and Pennsylvania—along with the District of Columbia to extend SCHIP coverage to children with family incomes up to 300% of FPL during calendar year 2007, just prior to the release of the Administration’s SCHIP guidance.  In short, the data show no discernable trend by states to target their energies on enrolling lower-income children first before expanding SCHIP up the income scale—a key concern of many conservatives during the debate on children’s health legislation last year.

Enrollment of Adults in Children’s Program:  The CRS report also analyzes the coverage of adults—pregnant women, parents, and childless adults—in the SCHIP program.  The CRS data do indicate that the total number of adults decreased from FY06 to FY07, and the number of childless adults on the SCHIP rolls halved.  However, the number of states covering adults increased, and several states saw expansion of the number of adults, and childless adults, covered under the program:

  • Eight states—Arkansas, Colorado, Idaho, Illinois, Nevada, New Jersey, New Mexico, Oregon, and Virginia—saw overall adult populations in SCHIP increase;
  • Three states—Idaho, New Mexico, and Oregon—saw increased enrollment in the number of childless adults;
  • Seven states— Arizona, Arkansas, Idaho, Illinois, Nevada, New Jersey, New Mexico, and Oregon—saw increased enrollment in the number of parents covered;
  • Three states—Colorado, Nevada, and Rhode Island—increased SCHIP enrollment for pregnant women.

While many conservatives may support the overall reduction in adults enrolled in a children’s health insurance program, some may still be concerned by the persistence of adult coverage—particularly given decisions by both Arkansas and Nevada to expand coverage to adults during FY07.  In addition, the fact that nearly 75% of the reduction in adult SCHIP enrollment from FY06 to FY07 came from one state’s (Arizona) decision to remove childless adults from the program rolls may lead some conservatives to question whether this welcome development was a one-year anomaly or part of a larger trend.

Conclusion:  Most conservatives support enrollment and funding of the SCHIP program for the populations for whom the SCHIP program was created.  That is why in December the House passed, by a 411-3 vote, legislation reauthorizing and extending the SCHIP program through March 2009.  That legislation included an additional $800 million in funding for states to ensure that all currently eligible children will continue to have access to state-based SCHIP coverage.

However, many conservatives retain concerns about actions by states or the federal government that would reduce private health insurance coverage while increasing reliance on a government-funded program.  To that end, data proving that many states have expanded coverage to wealthier populations without first ensuring that low-income children are enrolled in SCHIP, and that states have in recent months expanded coverage under a children’s health insurance program to adult populations, suggest that some states continue to expand government-funded health insurance, at significant cost to state and federal taxpayers, in a manner that may encourage individuals to drop private coverage.

Particularly given these developments, conservatives may believe that the Administration’s guidance to states remains consistent with the goal of ensuring that SCHIP remains targeted toward the low-income populations for which it was designed.  Therefore, many conservatives will support the reasonable attempts by CMS to bolster the integrity of the SCHIP program while retaining state plans’ flexibility, and question efforts by Congressional Democrats to encourage further expansion of government-funded health insurance financed by federal taxpayers.

 

[1] In general, state plan amendments can expand eligibility to higher income brackets, or otherwise modify state plans, while Section 1115 waivers by definition require the Secretary of Health and Human Services to waive statutory requirements under demonstration authority.  For more information, see CRS Report RL 30473, available online at http://www.congress.gov/erp/rl/pdf/RL30473.pdf (accessed September 8, 2008).