Coffee CAHC is a twice-weekly newsletter where we round up and comment on the latest health coverage policy developments both nationally and here in Maine. We hope you find these updates helpful!
115th Congress, 1st session
128th Maine Legislature, 1st session
April 12, 2017
Did everybody enjoy their summer yesterday? I don’t know about you, but that little burst of warm sunshine did me some real good. Speaking of bursts, how many of you experienced The Boom the other night? I was completely oblivious until friends texted me about it (hat tip to Coffee CAHC readers LH and LM for letting me know that an earthquake/sonic event/potential alien invasion force was upon us). Luckily for all of you, I pay much better attention to health care news than I do to my surrounds, apparently.
With Congress home for the recess, news and developments on the health care front have slowed to a bare trickle. The daily twists-and-turns that we’re used to seeing when everybody is in D.C.? Not so much right now.
One curious note to flag is a healthy dose of indecision from the Trump Administration on what, exactly, they plan to do about cost-sharing reductions, AKA CSRs, AKA “the subsidies for lower-income ACA enrollees that make their deductibles and other out-of-pocket costs more affordable”, AKA “that thing that insurers say if those payments go away they’ll run screaming for the hills.”
You may recall that there’s currently a court case about these CSRs. The House GOP sued the Obama administration over them, saying that the administration was spending money on them that Congress hadn’t actually allocated for that purpose. That case is still pending, with the next legal updates happening in May.
The way CSRs work is this: plans are required to lower out of pocket costs on silver-level plans for anybody whose income is between 100% and 250% of the Federal Poverty Limit (FPL). So – and understand that I am completely making up numbers here – instead of, say, a $5000 deductible, somebody who is at the lower end of the income scale may only end up having a $200 deductible.
Right now, the government reimburses carriers for those reductions, as required by the ACA, but the court case challenges the funding source that has been used to pay them up to now. If the payments go away, though, plans could still be required to provide those out of pocket cost breaks, but without getting reimbursed for them. Without that reimbursement, insurers would likely either hike premiums across the board to make up for the lost cost sharing revenue, or drop out of the Marketplaces entirely.
For a while the other day, it seemed that the Administration had signaled their intent to continue paying the subsidies at least while the court case proceeds. But once that story broke, the administration rushed to clarify that they’ve made no decision about CSR payments.
This is one of the biggest ways that the Trump Administration can, as I’ve mentioned before, make their predictions about Obamacare “exploding” a self-fulfilling prophecy. If they torch the CSRs, that will be a huge signal to insurers to get out of the Marketplaces. If they neglect CSRs, it’s still a big sign to insurers that they cannot reliably or dependably predict the stability of the Marketplaces, and they’ll flee the Marketplaces.
Like it or not, a healthy and functioning ACA requires a strong commitment from insurers to participate. They are looking to the Administration for some clarity right now, and getting very little assurance in return. That’s a recipe for disaster.
Meanwhile, a major new independent analysis by Standard and Poor’s finds that the exchanges are well stabilized, that insurers are increasingly able to manage this market segment, and that insurers on the exchanges are likely to enter profitability with these plans within the next year or two. A death spiral, this ain’t…yet.
I don’t have much in the way of updates at the state level since Friday. But keep an eye on this space in the weeks ahead, because a mountain of bills has been scheduled for public hearings, and there are mountains more to come.
The budget negotiations are in a feverish state right now, which is the other big attention-getter on the state level at the moment. If you’ve been through state budgets before, feel free to skip the rest of this section!
I thought I’d give you all some background on how the process of passing the budget works, because it might help explain why the whole thing looks as “chaotic” as it sometimes does from an outsider’s perspective. Really, what we’re seeing is the visible component of a very complex piece of parliamentary choreography.
The key phrase with the budget is “The governor proposes, and the legislature disposes.” That means the governor is the one who “proposes” a draft budget to fund the operations of the state government (well, almost all of the state government, anyway: the legislature itself proposes its own budget for the very few, and relatively small, offices that it controls, because the governor does not have executive authority over legislative operations. Separation of powers and all that!). Then it’s up to the legislature to “dispose” with it: that is, finalize it and vote on it and get it back to the governor for signature or veto.
The legislative budget process centers around, as I’ve said before, the Appropriations and Financial Affairs Committee. Whereas most legislative committees have dozens of bills every session, “approps” only gets a handful, because the budget is a beast that takes up almost all of their time for months on end. Approps manages the initial public hearings. Then they look to the various other legislative “policy” committees for their recommendations. Once those committee recommendations get back to approps, it’s approps that typically handles the negotiations over the final budget package, which will then go to the floor of the House and Senate for approval.
I say “typically” because this process has, in recent sessions, worked a little differently. In one recent session, House and Senate leadership – who are, of course, always very aware of and often pretty involved in the negotiations within the appropriations committee – ended up taking over the actual negotiations themselves. That’s pretty unusual. Then again, I don’t know if there has ever been a governor who has vetoed…hmm, has Governor LePage actually vetoed every budget he’s been presented with as governor? I think he may have! (Please correct me if I’m wrong here)
There are two final tricky bits to keep in mind. The first is timing and vote count. You have to pass the budget by a 2/3 majority. That’s because bills typically take effect 90 days after adjournment (sometime in September), unless you enact it as an “emergency” bill, which requires a 2/3 vote of whoever’s present in the chamber that day (there are technically some ways you can pass a “majority budget”, but suffice it to say, we’re not gonna see that happen anytime soon).
Since the state’s fiscal year resets on July 1, it takes an emergency vote to avoid a shutdown while the state waits for the new budget to take effect in September while the old budget lapses in July. The Legislature has a statutory (meaning “set in law”) adjournment date, which this year is June 21st. They have to finish everything up by then, or else extend the session by a vote (and it’s expensive to keep themselves open for extra time).
Circle June 21st as the absolute deadline, sure, but don’t forget that there are other pieces that push the working deadline back by quite a few weeks. Gotta remember there’s 10 days for the governor to veto once it gets to him, of course. But also – and you may not think about this – it takes significant amounts of time it takes just to run the calculations when there are changes proposed. We’re talking about hundreds of pages and about $6 billion here, after all, so a “tweak” requires serious work to examine. Once the budget negotiations are closed, it takes even more time to print the thing for the legislature to consider it. Realistically, even though June 21st may seem far away, we are right in the think of it now. The pressure will only increase in the days ahead.
The second tricky aspect is that the state, unlike the federal government, must have a balanced budget. We can’t “deficit spend”; we can’t project revenue or offsets beyond the two-year “biennial” window for the budget itself; and, in theory anyway, we can’t pass “continuing resolutions” that keep the state government operating while the legislature figures something else out (although that has been floated this year, but seems constitutionally questionable). It’s all or nothing and it’s all gotta balance.
So that’s how the budget process works and why it looks so complicated from the outside – because it is!
Would you like to know more?
Wonkblog at the Washington Post has some more background on CSRs and how insurers need clarity from the Administration to figure out their planning for next year.
Finally, flagging two great pieces over at Health Affairs blog for you.
The first is a terrific look at the “invisible risk sharing” (AKA “reinsurance”) programs everybody was talking about last week. I really, strongly recommend that piece – it includes a big chunk about Maine’s experience with MGARA.
The second is an excellent examination of Medicaid work requirements. To be blunt, they’re a punitive way of punishing people who rely on Medicaid for their health coverage, and they don’t work – like, at all.
Until next time, friends, I remain,