California bill aimed at deterring large employers from placing low wage workers on part time status to avoid ACA coverage mandate
California employers with 500 or more workers would be required to pay the state a penalty based on the average cost of coverage provided by large employers for those employees that enroll in Medicaid (Medi-Cal in California) coverage under advancing legislation.
According to an analysis of AB 880 prepared by the Assembly Health Committee, the bill is aimed at deterring large employers with sizable numbers of low wage workers from reducing their hours to less than 30 hours per week in order to avoid the Patient Protection and Affordable Care Act requirement to offer coverage to all workers employed at least 30 hours per week. “The author states this bill is designed to ensure that the largest employers in the state do not evade their responsibilities under the ACA by cutting hours and eliminating benefits so that their employees qualify for Medi-Cal,” the analysis states. “This shifts costs onto the public and threatens the fiscal solvency of the state.”
As AB 880 moves forward, legislation stating intent to expand California’s Medicaid eligibility under the Affordable Care Act to households earning up to 133 percent of federal poverty level has bogged down over the extent to which counties should share in the cost and the Brown administration’s concern over the long term fiscal impact of the expansion and specifically whether California will remain obligated to honor it if federal cost share funding is cut in the future. Anxiety over Medicaid remains high among the state’s budget writers. They viewed the state’s Medicaid cost share as a budget buster during years of fiscal shortfalls following the economic downturn that began in 2008.
Medicaid beneficiaries appear increasingly likely to participate in health benefit exchanges in at least some states in 2014. Two Medicaid-eligible populations may end up getting commercial health insurance via the exchanges: those whose incomes fluctuate above and below Medicaid eligibility levels and those residing in states that have opted not to expand the Medicaid eligibility cutoff to 133 percent of federal poverty guidelines. Both scenarios require waivers from the Center of Medicare and Medicaid Services (CMS).
The first group would be offered exchange products called Medicaid bridge plans authorized under guidance issued by CMS on December 10, 2012. This is the so-called “Tennessee Plan” since that state originated the concept and is designed to ensure continuity of medical care of Medicaid beneficiaries so they don’t have to change plans and providers as their incomes rise and fall.
The second population would participate in the exchange marketplace under the so-called “Arkansas Plan” in states that have not chosen to expand Medicaid eligibility to those earning up to 133 percent of federal poverty as authorized by the Patient Protection and Affordable Care Act.
In California, legislation that would expand that state’s Medicaid eligibility has failed to advance for nearly two months amid state fiscal concerns over the long term cost share impact and to what extent counties should participate in the cost share. Legislation authorizing Medicaid bridge plan products for those earning up to 200 percent of federal poverty, SBX1-3, has passed the Senate and awaits action in the state Assembly.
For health insurers and health care service plans, state health benefit exchanges represent a major business opportunity that will generate an estimated $205 billion in premiums by 2021, according to a report issued this month by PwC’s Health Research Institute.
“Public exchanges will create an irreversible shift in the insurance market that will ultimately change the way medical care is sold in the U.S.,” the report notes. It adds the caveat that managing this large new cohort of covered lives poses challenges. “Insurers will continue their battle to keep a balance of healthy and sick members to limit adverse selection. Providers and insurers will face clear challenges in serving a new customer base with a demographic profile and health needs that differ from today’s insured population in meaningful ways.”
In addition, many of the newly covered will churn between Medicaid and commercial coverage sold in the state exchanges as their incomes and life circumstances change. The full report, Health Insurance Exchanges: Long on options, short on time, can be downloaded here. (Registration required)
The Congressional Budget Office (CBO) concludes the high court’s ruling leaving the health benefit exchange component and related mandates of the Patient Protection and Affordable Care Act intact but striking down the mandatory state expansion of Medicaid will lower the law’s implementation cost from 2012 to 2022. The reason, CBO concluded, is it will cost the Treasury less in income tax subsidies to help people purchase coverage through the exchanges than it would to add them to the Medicaid rolls:
With about 6 million fewer people being covered by Medicaid but only about 3 million more people receiving subsidies through the exchanges and about 3 million more people being uninsured, and because the average savings for each person who becomes uninsured are greater than the average additional costs for each person who receives exchange subsidies, the projected decrease in total federal spending on Medicaid is larger than the anticipated increase in total exchange subsidies.
Click here for the CBO’s summary and link to the updated budget projections.
Can Active States Endure A Ground Shift? Implications Of The Supreme Court’s Health Reform Decision – Health Affairs Blog
If the Supreme Court invalidates components of the Affordable Care Act, active states will try to adapt to the shifting ground by designing new policies to mitigate adverse selection and cover the uninsured. However, their success in doing so will depend in part on how much the ground shifts.
This is a thorough discussion of how state Medicaid and health benefit exchanges could fare after the U.S. Supreme Court issues its ruling on the Patient Protection and Affordable Care Act this month. The focus of the article is the 14 states that are moving forward with putting their exchanges in place.
PPACA expected to “barely bend” health care cost curve, challenging affordability of health insurance
The Patient Protection and Affordable Care Act (PPACA) will be unable to significantly slow the rising cost of health care. As a result, the price of health coverage will soon become unaffordable for low and moderate income Americans, concludes a projection prepared by Richard A. Young, MD, and Jennifer E. DeVoe appearing in the March/April Annuals of Family Medicine.
The authors predict based on the current rate of increase in health insurance premiums and wages and barring significant structural changes in the health care system, the average cost of a family health insurance premium will equal half of household income by 2021 and surpass the average household income by 2033. When out-of-pocket costs are added to premiums, the 50 percent threshold would be reached by 2018 and exceed household income by 2030, they forecast.
Based on their prognostication of a “barely bending” health care cost curve, Young and Devoe suggest America’s health care landscape could undergo major change. The shift away from all in employer-paid group insurance coverage in favor of defined contribution health plans could accelerate. They speculate that lower income workers could determine they can’t afford to participate in these plans and instead attempt to qualify for Medicaid under PPACA provisions expanding the government paid health coverage.
This point coincides with a Congressional Budget Office (CBO) estimate issued this month reducing the amount of people expected a year ago to obtain commercial insurance as the PPACA is implemented. “Fewer people are now expected to obtain health insurance coverage from their employer or in insurance exchanges; more are now expected to obtain coverage from Medicaid or CHIP or from nongroup or other sources,” the estimate states. “More are expected to be uninsured.” The updated estimate is based on a revised CBO economic forecast of lower wages and higher unemployment during the 2012-2021 forecast period than projected in March 2011.