The Affordable Care Act and Medicaid Expansion
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THE AFFORDABLE CARE ACT AND MEDICAID EXPANSION: EXAMINING THE ARKANSAS PRIVATE OPTION AS AN ALTERNATIVE MEDICAID WAIVER DESIGN TO EXPAND HEALTH INSURANCE COVERAGE FOR THE UNINSURED A thesis presented by Brian Dermot Coyne To Doctor of Law and Policy Program In partial fulfillment of the requirements for the degree of Doctor of Law and Policy College of Professional Studies Northeastern University Boston, Massachusetts May 2016 To my parents Dr. Dermot P. Coyne and Dr. Ann Coyne Who instilled in me a lifelong love of learning. That love continues. 2 ACKNOWLEDGEMENTS I want to especially thank Dr. Neenah Estrella-Luna, who served as my thesis advisor, for her thoughtful guidance and encouraging support throughout this project. I would also like to thank Professor Kenneth Apfel, who served as my external reviewer, and who provided me with constructive comments and ongoing advice during the writing process. I want to thank Professor Dan Urman, James Passanisi, and all the faculty and staff in the Doctor of Law and Policy Program at Northeastern University for their work to make this program challenging and thought-provoking each and every day. Finally, I would like to thank my family, my wife, Maureen, and my son, Patrick, for their support of me during this journey. It has been a while since I was a student. They put up with my frustrations and shared in my successes. Their love and support was steadfast as I took on this new challenge. I can never thank them enough for allowing me the opportunity to seek the degree of Doctor of Law and Policy. Let me just simply say thank you and I love you once more. 3 ABSTRACT The Arkansas premium assistance model, commonly known as the Private Option, is one of six alternative Medicaid waiver designs that have been approved in states to expand coverage for low-income adults. The waiver places adults age 19-64 and under 138% of poverty in the newly established health insurance exchange and uses Medicaid funding to purchase the premium payment for health plan coverage. The program began in January 2014. This qualitative descriptive study examined the key operational and program features of the Private Option in order to provide a formative evaluation of how well it is working at this early stage. The study also examined if this model, or similar models, might offer a promising path for the 19 states that have chosen not expand coverage for populations newly eligible for Medicaid under the Affordable Care Act. The results of the study suggest that it is a potentially promising model. Arkansas saw the largest drop in the uninsured rate in the country in the first 18 months since the program began. It has also expanded its provider networks, added new health plans to the marketplace, and the program is generating overall net state savings. Politics, policy, and state costs are factors that drive the current debate in states that have not expanded. Framing coverage as a uniquely designed state approach and not Medicaid expansion are key conditions for moving forward. Language emphasizing a private sector approach and personal responsibility are critical factors as well. There are challenges, however, between Medicaid rules and exchange rules, particularly around the issue of cost-sharing. There is a significant cliff between the two programs in terms of personal financial obligations that will likely need to be remedied in the years ahead. Studies show that as many as 50% of those under 200% of poverty are likely to transition between 4 eligibility for these two programs in any given year, and these cost-sharing differences apply despite an integrated program. The Affordable Care Act is part of an ongoing process that has transformed Medicaid from a social welfare program to an income-based program to provide health insurance coverage to low-income populations. The integration of these two programs, Medicaid and the health insurance exchanges, through premium assistance, reflects these transformative changes and are part of the continuing evolution of our nation’s health care system. 5 TABLE OF CONTENTS ACKNOWLEDGEMENTS………………………………………………………………3 ABSTRACT……………………………………………………………………………….4 Chapter 1: Introduction and Literature Review……………………………………….10 History of Medicaid......................................................................................................15 Medicaid Today………………………………………………………………………18 History of Premium Assistance………………………………………………………20 Major Areas of Operational Interest……………………………………………….…21 Role of the Federal Government……………………………………………………..31 Federalism…………………………………………………………………………....32 Criticism and Alternatives to Premium Assistance…………………………………..33 Political Landscape………………………….………………………………………..36 Research Questions Raised………………….………………………………………..38 Chapter 2: Research Methods…………………………………………………………...40 Research Design……………………………………………………………………...41 Limitations……………………………………………………………………………48 Ethics…………………………………………………………………………………49 Chapter 3: Results and Discussion: The Arkansas Private Option…………………...51 Enrollment…………………………………………………………………………....52 Provider Networks…………………………………………………………………....56 Health Plan Competition……………………………………………………………..59 Medically Frail……………………………………………………………………….63 6 Wrap-Around Benefits……………………………………………………………….66 Health Outcomes……………………………………………………………………..68 Cost-Sharing………………………………………………………………………….70 State Costs……………………………………………………………………………76 General Operational Metrics…………………………………………………………80 Chapter 4: Results and Discussion: The Path Forward……………………………….83 Federal Funding and Economic Pressures……………………………………………83 2016 Presidential Election……………………………………………………………86 Role of the Federal Government……………………………………………………..89 States…………………………………………………………………………………95 Politics………………………………………………………………………………..98 Evaluation…………………………………………………………………………...104 Chapter 5: Recommendations and Conclusion…………………………………….…106 The Arkansas Private Option……………………………………………………….107 The Federal Government…………………………………………………………...117 States………………………………………………………………………………..122 References…………………………………………………………………………….....127 Appendix A: IRB and Related Documents…………………………………………....140 Appendix B: Codebook………………………………………………………………...144 Appendix C: Interview Guide………………………………………………………....149 Appendix D: Glossary of Terms……………………………………………………….152 Appendix E: Poverty Level Table……………………………………………………..155 7 LIST OF TABLES Table 2.1. Operational Metrics…………………………………………………………...42 Table 2.2. Areas That Impact a State’s Decision Making Process……………………….43 Table 2.3. Major Evaluation Reports of the Arkansas Private Option…………………...45 8 LIST OF ACRONYMS Acronym Definition ACA Patient Protection and Affordable Care Act. Commonly known as the Affordable Care Act. Also known as Obamacare CHIP Children’s Health Insurance Program CMS Centers for Medicare and Medicaid Services EHB Essential Health Benefits EPSDT Early and Periodic Screening, Diagnostic and Treatment benefit ESI Employer-Sponsored Insurance ER Emergency Room FMAP Federal Medical Assistance Percentage FPL Federal Poverty Level GAO Government Accountability Office HIA Health Care Independence Accounts HCIP Health Care Independence Program. Commonly known as the Arkansas Private Option HHS Department of Health and Human Services PCP Primary care physician QHP Qualified Health Plan TANF Temporary Assistance for Needy Families 9 Chapter 1 Introduction and Literature Review The Patient Protection and Affordable Care Act (ACA), federal legislation designed to reform our nation’s health care system, was signed into law on March 23, 2010. Among its many goals, the ACA was designed to provide health insurance coverage through the creation of a marketplace of health insurance exchanges as well as the expansion of Medicaid for many of the 48 million people who were uninsured in this country before the new law took effect. (Walt, Proctor & Smith, 2013). This historic legislation has been highly controversial. It was passed without a single Republican vote in either the U.S. House of Representatives or the U.S. Senate. It has also lacked broad public support. Most polls show a majority of Republican voters oppose what has become known as ObamaCare, most Democratic voters support it, and Independent voters are split (Clement & Craighill, 2014). Since its passage, the ACA has faced two U.S. Supreme Court challenges. In June 2012, the Supreme Court, in a 5-4 decision, upheld the law in National Federation of Independent Business v. Sebelius (2012). As part of its decision, however, the Supreme Court ruled 7-2 that Medicaid expansion under the new law was unconstitutionally coercive on the states, but to remedy that violation, ruled that Medicaid expansion must be an optional choice for the states rather than invalidating that portion of the Act. Under the ACA, prior to this decision, if a state opted not to expand Medicaid, it would forfeit all federal funding for its entire Medicaid program. In the spring of 2015, the Supreme Court again took up the ACA in King v. Burwell (2015). This case involved a challenge to the administration’s statutory interpretation of tax 10 credit subsidies for people in state and federal health insurance exchanges. Tax credit subsidies are used to offset part of the cost of a health insurance premium for people at certain income levels. Plaintiffs argued that the statute, as written, did not grant the IRS the authority to provide tax credit subsidies to individuals in federal health insurance exchanges. Thirty-four states had opted to allow the federal government to operate federal health insurance