So, now what?

by Mike Miesen

The last post I wrote outlined what would happen to the Medicaid program under a Romney Administration. We can now add the tag “things that never happened” to it.

Regardless of whom you voted for, Millennials, one thing is clear: you voted. A lot. According to the early numbers, almost 23 million of us voted – 49% of eligible Millennials. Let’s be honest: we have a huge influence nowadays, folks.

By the time the confetti hit the floor, you probably asked an important question: “Now what?” I’ll tell you what: Christmas commercials. Seriously. On November 7th. Let’s just hope they don’t go negative.

Oh… you meant with respect to healthcare, didn’t you? Sorry, ‘tis the incredibly-early-start-to-the-season, and all that. In slightly condensed form, here’s what you, as a Millennial, should know about health reform, Medicaid, and the state-based health exchanges that are now officially offical.

The “three-legged stool” stands. As Uwe Reinhardt outlined back in 2009, if insurance companies are required to insure a population at a “community-rated premium”—or in non-wonk-speak, outside of broad demographics, insurers must charge everyone the same premium (leg one); that population must be required to purchase an insurance plan (leg two) so that the dreaded “insurance death spiral” doesn’t occur. If a mandate to purchase a good is in effect, it should be affordable to all—leading to subsidies for those that can’t afford it (leg three).

To prolong the metaphor: this stool is what the Patient Protection and Affordable Care Act – now officially a thing that isn’t going away—sits on. Most Americans have an insurance plan (if they don’t, the penalty will be $695 or 2.5% of income in 2016, whichever is greater), and any family making 138% – 400% of the Federal Poverty Line (FPL) will receive a sliding-scale subsidy to offset the cost.

Which brings up two important questions: what about those that make less than 138% of the FPL? And how are individuals and small businesses going to purchase insurance? These questions sound simple and uniform, but are neither; some states are planning on not playing nice with health reform, a decision that could have a significant impact on tens of millions of Americans.

The Medicaid floor (and its holes). As I’ve previously written, Medicaid is complicated, and states have historically been given the latitude to decide whom to cover. Pre-Supreme Court ruling, that was going to change—at a minimum, any American making less than 138% of the FPL would be eligible, full-stop.

Post-Supreme Court ruling, it’s slightly more complicated than that; states can refuse to expand their Medicaid program without penalty, and at least six have vowed to do so (as this great graphic from The Advisory Board shows below). Whether they all go through with that pledge is an open question; many analysts believe that the deal—which has the federal government paying 100% of the increased costs until 2017, and 90% thereafter—is too good to pass up, and they’ll walk back their promise.

Here’s the bottom line: most states will allow anyone with an income less than 138% of the FPL to enroll in Medicaid.

Health insurance exchanges. So it’s January, 2014, and you’re looking to do your individually-mandated duty and purchase a health insurance plan. Great, where are you going to start your search?

Enter the state-by-state health exchanges—mechanisms to help you choose which plan is best for you. Individuals and small businesses will be able to compare a list of options carefully vetted by the state, find out if they qualify for a subsidy, and purchase the plan – in person or online.

Sounds simple, right? Theoretically, sure. But states are a lot like you and I—they’re relentless procrastinators, and sometimes refuse to do their assignments on principle. The “due date” for their final project – a proposal to create an exchange—is November 16th, and so far only 19 have established, or are planning to establish, an exchange. Another 24 are “studying options,” and eight have decided not to establish an exchange (the infographic from the Kaiser Family Foundation below lays this out nicely).

Ironically, states that are objecting on principle will soon find themselves with a state exchange anyway—one set up by the federal government. With two weeks left before the deadline, it seems clear that a number of states will look to the federal government for assistance in setting up the exchange.

There’s much, much more, of course. But let’s be honest: after a grueling presidential race, the last thing you want to do is sit down to a wonky, in-the-weeds discourse on health policy. In brief: 2013 will see some Medicare and Medicaid payment reforms; 2014 is when the health insurance exchanges, Medicaid expansion, and individual mandate go live; and 2015 gives rise to the Independent Payment Advisory Board in Medicare.

I’ll leave you with this: 2016 is the first year a Millennial will be eligible to run for President of the United States.

_____________________________

Mike is a healthcare consultant specializing in hospital operations who graduated from the University of Wisconsin-Madison. Follow him on Twitter @MikeMiesen.

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