By John Reichard, CQ HealthBeat Editor
August 12, 2011
It may be mid-August, but the heavy lifting continues at federal agencies to create a far-flung system of insurance exchanges.
Obama administration officials outlined three new proposed regulations totaling more than 400 pages and awarded USD 185 million more in grants to states to build the insurance marketplaces.
No fewer than eight administration officials were on a press call with reporters to answer questions about the three regulations and influx of dollars pushing the states forward with their exchange development efforts. Tea Party activists and Republican officials in some states have decried the creation of exchanges as cooperating with “Obamacare.”
This show of force contrasted with other recent developments creating some uncertainty about the momentum behind exchange work: the coming departure of Joel Ario as head of the Health and Human Services Department exchange office and the return by Kansas of a big grant to do pioneering information technology work that would help other states perform the complex data transactions needed to make exchanges work.
The proposed regulations aim to establish processes for enrolling individuals and families in plans offered by exchanges; lay out how an estimated 20 million Americans will get tax credits to help them pay the premiums charged by insurers and establish a “seamless” enrollment process in which people benefit from “one-stop shopping” in exchanges and to easily enroll in Medicaid or the Children’s Health Insurance Program if they don’t qualify for the tax credits.
Simple and speedy
Under the healthcare law, in general everyone is required to have insurance, but it’s not necessarily clear what kind of coverage payment plan an uninsured person is qualified to obtain: it could be the tax credits available to buy private coverage in the exchanges, Medicaid, the Children’s Health Insurance Program or none of the above. The proposed regulations aim to make exchanges a place that quickly determines eligibility and speedily enrolls people in the appropriate plan.
The intent is to “establish streamlined, coordinated eligibility determination systems for premium tax credits, Medicaid and CHIP that allow people to buy online, by mail, or by phone through one simplified streamlined application,” HHS said.
One of the three proposals, the “Exchange Eligibility and Employer Standards,” in most cases “will allow for a near real-time eligibility process so that individuals can receive an eligibility determination and enroll in a plan in a single session,” according to an HHS fact sheet. “Exchanges will make it simple for individuals and families to access the coverage for which they are eligible, whether that is private coverage, Medicaid or CHIP.”
HHS added that “no matter how an application is submitted or which program receives the application, an individual will use the same application and receive a consistent eligibility determination without the need to submit information to multiple programs.”
The 139-page proposal also deals with the creation of exchanges for small employers and is called the “Small Business Health Options Program” (SHOP).
These exchanges will make it easier for employers to find out what the plans cover, how much they charge, and the quality of their care. Employers that buy coverage through the SHOP may qualify for a tax credit of up to 50 percent of the employer’s contribution toward employee coverage. The SHOP is also supposed to reduce administrative hassles for small employers.
Medicaid proposal not just about exchanges
The 203-page proposed rule pertaining to Medicaid would require that exchanges conduct eligibility determinations for Medicaid but it deals with many more issues. It also implements the policy that will provide additional federal funding for the states when Medicaid expands to enroll an additional estimated 16 million uninsured people in 2014 under the health law.
For example, the rule creates a new Medicaid coverage group covering adults with incomes up to 133 percent of the federal poverty line. In 2011, that’s USD 14,500 for an individual and USD 29,700 for a family of four. It outlines new federal payment matching rates for newly eligible enrollees providing 100 percent federal funding for calendar years 2014 through 2016, declining to 90 percent in 2020 and the permanent federal matching rate after that point.
In addition, the rule proposes matching rates for states that expanded coverage in Medicaid for adults before the healthcare law was passed. An HHS fact sheet on this proposal also notes that it “offers states a choice of new approaches for how they can access new federal funding to support newly eligible individuals. Rather than require the state to track who would be eligible before and whom after the health reform laws passed, the proposal lets states opt to use ‘proxy’ rules for who is newly eligible, statistical sampling, or data-driven estimates of the proportion of spending associated with newly eligible individuals.”
The proposal says that determining financial eligibility for both Medicaid and CHIP would be made simpler by relying on modified adjusted gross income figures. Eligibility categories would be collapsed into four primary groups: children, pregnant women, parents and the new group of adults with incomes up to 133 percent of the federal poverty standard. Coverage renewals would be conducted once every 12 months unless the enrollee reports a change or the state agency has information prompting a reassessment of eligibility.
Tax credits for 20 million Americans
The 67-page rule proposed by the Treasury Department “lays the foundation to deliver tax credits to help make health insurance affordable for middle-class Americans,” according to the department’s fact sheet. When the health law is fully phased in, individuals getting the credits will receive an average subsidy of USD 5,000 a year and a total of 20 million Americans will benefit, it added.
Recipients do not have to wait until they file a return to get the credit; they get it in advance in the form of an IRS payment to the insurance company in which they have enrolled. If it turns out that the credit was greater than they should have received, the overpayment is recaptured when they file their tax return the following April.
In general, the premium tax credit is available to individuals and families with incomes between 100 percent and 400 percent of the federal poverty level, or USD 22,350 to USD 89,400 for a family of four. To qualify, people in those income groups must use the credit on a “qualified health plan” offered by an exchange and they cannot be eligible for Medicaid, Medicare, or “affordable” employer-sponsored coverage.
Official took pains to say they want public comment and that the proposals will be improved depending on what they hear. The proposals have a 75-day comment period. In addition, HHS will hold forums to get public comment in Atlanta, Chicago, Denver, New York City, Portland, Oregon, and Sacramento, California.
Separately, HHS Secretary Kathleen Sebelius wrote to state governors seeking their input. “Based on your feedback, HHS is already developing information technology initiatives to make eligibility determinations easier for states, including a federal “hub” through which HHS will provide certain data verification services to all Exchanges as well as Medicaid and CHIP, rather than requiring Exchanges and these other programs to interact separately with multiple federal agencies,” Sebelius wrote.