States have seen their recent coverage expansion efforts fall short of the needed financing.

July 20—States aim to bolster medical coverage options for their residents but doing it on their own has proven difficult and may negatively affect hospital finances, according to some policy experts.

This spring, the Nevada Legislature passed a so-called Medicaid-for-All bill that would have required state officials to create a mechanism for all residents to buy into a Medicaid-like program, regardless of income. Nevada Gov. Brian Sandoval, a Republican, vetoed the bill in June.

The bill, which ran just four pages and was short on specifics, offered a framework for the Nevada Care Plan, an alternative for Nevadans who might lose their health coverage should the Republican-led Congress and President Donald Trump make good on their promise to repeal parts of the Affordable Care Act (ACA).

While the bill garnered national attention, it worried providers because it lacked specifics. In his veto statement, Sandoval wrote that the bill would have added “more uncertainty to an industry that needs less.”

The Nevada Hospital Association informally expressed strong reservations about payment levels and whether the funding would be enough to get providers to participate. Nevada ranks fifth from bottom among all states in Medicaid inpatient fee for service payments, according to a Medicaid and CHIP Payment and Access Commission brief.

The continued uncertainty surrounding the ACA, despite the U.S. Senate's continued failure to muster the votes for a replacement bill, may spur state lawmakers to consider similar schemes to Nevada's Medicaid for All. However, policy experts said they are not convinced these efforts would be successful.

“I think for most states this kind of proposal would result in a lot of pushback from providers, because if they were paid Medicaid rates for all of their business (aside from Medicare), most would lose on net,” Katherine Hempstead, senior adviser to the executive vice president at the Robert Wood Johnson Foundation, said in an email. “Hospitals would potentially have more to gain since they end up with uncompensated care but they would also lose out on their most profitable patients, who are currently commercially insured."

Matt Salo, executive director of the National Association of Medicaid Directors, who referred to the Nevada approach as “one way to get to single payer, said he has not heard other states considering the approach.

A concern Salo raised to the Medicaid buy-in was “as the program grows the budget pressures to keep [provider] payments low [also] increase.” The result is that a provider organization that can financially survive with Medicaid as 20 percent of its business cannot when the share grows to 40 percent, for example.

“So there comes a point where Medicaid grows and grows and you’re like ‘Not only are we growing the number of people, we’re going to have to start paying more to ensure access,’” Salo said in an interview.

Repeal Impact

States' unsuccessful efforts to expand coverage on their own underscores the stakes of an ACA repeal, said Sara Collins, vice president for health coverage and access at the Commonwealth Fund.

“We've had history of states trying to do expansions on their own and coming up short in financing it,“ Collins said. “It is really hard to see how states could sustain even the level of Medicaid expansion provided by the ACA."

A July 20 projection by the nonpartisan Congressional Budget Office concluded that the latest version of the GOP’s ACA replacement bill would increase the number of uninsured by 2026 by 22 million—including 14 million fewer in Medicaid programs.

Additionally, state-based coverage expansion efforts have been historically rolled back during lean years, so they offer less stability to both providers and patients, Collins noted.

Other States

While a number of states have active concerns about preserving coverage expansion provided by the ACA, none went as far as Nevada this past legislative session, according to Richard Cauchi, program director for health programs at the National Conference of State Legislatures (NCSL), which tracks statehouse activities.

In 2017, nine states filed bills on health reform, but those were not related to an ACA repeal threat. Also this year, at least nine states had one or more bills to move forward with a single-payer health program, but none of those have become law, according to the NCSL.

Some states have used alternative funding streams to expand coverage. In 2015, California expanded full-scope Medicaid (called Medi-Cal in the state) eligibility to undocumented children and young adults under age 19, based on family income requirements. Called Health For All Kids, the program launched in May 2016 and covers 189,000 children using state discretionary funding and it was allocated $279.5 million in the most recent budget.

This year, the California legislature approved a budget provision to extend the same coverage to low-income undocumented young adults ages 19 to 26. The cost to extend coverage to about 80,000 eligible young adults was estimated at $86 million annually. Funding for the program was sought through new tobacco tax revenue that will generate about $1.2 billion in the first year. However, Gov. Jerry Brown, a Democrat, ultimately did not include funding for the young adult expansion program in his budget, citing other priorities.  Med-Cal covers 13.5 million Californians, or one in three people statewide.

Faced with the prospect of a huge drop in federal funding if there is an ACA pullback, states are unlikely to take aggressive action to shore up coverage, said Hempstead of the Robert Wood Johnson Foundation. 

“In the context of a potentially huge reduction in federal funding for Medicaid, it would be risky for states to undertake a reorganization of health care where they would end up accepting even more financial risk than they currently have,“ she said.

Statehouse activity to tinker with health coverage expansion is nothing new and it is worth watching to see how states will respond next year to any federal changes to the ACA, Cauchi said.

However, no action is expected in Nevada, he noted, as the state legislature convenes only every other year.

Rebecca Vesely is a freelance writer based in San Francisco. You can follow her on Twitter at @rebvesely.

Publication Date: Thursday, July 20, 2017