ABLE Accounts

The ABLE Act was passed in 2014 and allows states to start a program that would allow certain people with disabilities to open tax-exempt savings accounts. Last week, CMS released guidance on how this law interacts with state Medicaid programs.

The law is designed to allow certain people with disabilities to save money and use their savings on services and expenses to maintain their quality of life, maintain health, independence and quality of life. The program is not meant to supplant existing programs and notably missing is language that calls for improvements in people’s lives. One key part of this account is that these funds cannot be counted as resources or assets for determining a person’s Medicaid eligibility. The earnings and interest gained on these accounts would not be counted for income purposes. States can use the funds to account for estate recovery after the beneficiary has died. This could potentially reduce the problems associated with transfer of assets and selling of houses by disabled beneficiaries in an effort to protect assets from estate recovery policies. The benefit is only available to people who have had a diagnosed disability and eligible for SSDI prior to the age of 26 and living in a state with an ABLE program. This is a limited group of beneficiaries and exempts many different types of working disabled adults.

Medicaid and SSDI benefits exist to assist people who need the safety net of assistance. In these safety nets we should provide a pathway to improve their quality of life and assist them to be able to receive better health and independence. This program improves the existing reality for many disabled adults, however there is more to be done to ensure that more people are able to live at their highest quality of life with independence. Medicaid is a pathway to improving lives for many but there are many barriers to prevent people from reaching opportunities they could achieve.

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Medicaid is already flexible: part 2538925729

In the continuing series on this blog we will examine how Medicaid already contains significant flexibilities that allow states to tailor their programs to the needs of the state and respond to emerging issues.

This time- responding to the opioid epidemic. In January 2016, CMS released a letter to states outlining the existing flexibilities and new flexibilities states could use to provide benefits to Medicaid eligible residents in their states. Anna Gorman at Kaiser Health News has a nice piece out about what California’s project looks like and how it’s impacting people. Virginia, Massachusetts, and Maryland have expanded treatment using these flexibilities and West Virginia and Michigan are pursuing waivers from the federal government.

These flexibilities and waivers were executed using existing Medicaid flexibilities and CMS encouraged states to apply using the specific flexibilities. This will hopefully bring more care to people with opioid addiction and help turn the tide of our crisis in America.

Medicaid is insurance

maineMaine is in the process of proposing Medicaid expansion on their November ballot. This initiative would expand Medicaid to those earning less than 138 percent of the federal poverty level (FPL) and fulfill the six attempts of the Maine legislature to pass the expansion bill, consistently blocked by LaPage’s veto. Maine initiative law prevents the governor from vetoing the publicly passed legislation.

Last month, Republican legislators began pushing for the Medicaid program to be called “welfare” rather than insurance. Governor LePage has been pushing for the same change last week. Today it was just announced that the language on November’s ballot question would not contain the words welfare, entitlement, or insurance. There are several ways to analyze the claim that Medicaid is not insurance but welfare and by all of these methods, Medicaid meets the definition of insurance.

First, looking at the dictionary definition of insurance Merriam Webster defines insurance as, “coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specific contingency or peril.” The one party in the case of Medicaid would be the government. Some point to a definition of insurance as one requiring a premium or payment in return for a service. The underlying assumption in this definition is that Medicaid beneficiaries do not pay taxes. Medicaid beneficiaries, especially those that earn taxable income who would gain Medicaid expansion, do pay taxes whether that is income taxes or sales taxes that fund state and local services.

Further, Medicaid is often not a free service. Many Medicaid beneficiaries are required to pay cost sharing for health care services. Under existing law states are permitted to charge certain Medicaid populations limited amounts for services. Several states have taken advantage of Section 1115 waiver authority to extend these limits to require greater cost sharing from lower income groups. In many ways states are moving to treat Medicaid as a private insurance program rather than welfare program. Over 70 percent of beneficiaries are under private insurers policies. In states like Arkansas, Medicaid expansion is nearly indistinguishable from private plans for beneficiaries.

Second, looking at the impact of Medicaid on a beneficiary’s financial protection. Studies that look at Medicaid’s impact on beneficiaries vary on many of the health impacts but they consistently find that people who gain Medicaid coverage benefit in every financial indicator whether that be fewer bankruptcies to less borrowing for medical expenses. The point of having insurance for anything, a car, a house, or one’s life is to financially protect a person when they need to spend a substantial amount of their resources on that expense. Medicaid has been shown time and time again to protect people from incurring financial strain from both catastrophic health problems and from the regular expenses that are necessary to promote health.

Why is this exceptionally important? Looking back at the RAND health insurance experiment from the 1970s found that added cost-sharing for medical expenses did not decrease health indicators for people with medium and high levels of wealth, but health indicators decreased for low-income beneficiaries. This means that low-income people are likely to forgo necessary treatment when faced with financial obligation and that payment for care presents a significant burden to care. This supports the idea that Medicaid is insurance because like insurance plans that offer low cost sharing, Medicaid reduces the cost of coverage and ensures health isn’t harmed. Just because Medicaid is often a free or low cost program for beneficiaries does not indicate that it is a welfare program. Rather it indicates that it is the appropriate level of cost sharing for the population receiving the insurance program to maintain health.

Third, Medicaid has been delinked from welfare. In 1996 as part of the welfare reforms, Medicaid eligibility was delinked from welfare allowing people who are not welfare eligible sign on to the program. This in turn allowed for states to begin to experiment with higher eligibility levels for childless adults who were previously ineligible because they did not meet welfare eligibility standards. The Medicaid expansion fits the mold of these de-linked programs. The people who are eligible for Medicaid expansion are oftentimes not eligible for welfare programs.

So why have we not agreed what insurance looks like? There are many reasons one of which is car insurance. Most people’s main interaction with the insurance system is to buy an insurance product for expensive items like their car or home. These items that are insured are often considered luxury items and the costs associated with insuring them are a result of the decision to purchase a car. Chances are people also view the insurance as a product that is purchased to protect a person against the high cost of catastrophic expenses, rather than routine maintenance. Health is different. Routine care is often unaffordable and caring for one’s health is not a luxury. In the same way, insurance can come in different forms. In it’s core, insurance must protect people against financial distress. Redefining insurance as a private market product neglects the history of public sector insurance and doesn’t account with the current Medicaid program.

Meanwhile in South Carolina

Last week South Carolina Governor Henry McMaster instructed his Medicaid office to ask CMS for permission to exclude abortion clinics from Medicaid reimbursements and family planning clinics within 25 miles of an abortion facility from Medicaid payment. Currently, the federal Medicaid program will pay for abortion services in cases of rape, incest, or the life of the mother is at stake. Federal money will not pay for other cases of abortion. This proposal seems to go beyond that limit. The provision about family planning centers seems to be a direct target on Planned Parenthood facilities, since they are often located in urban areas where abortion clinics would be present. In South Carolina, the facilities are located in Charlestown and Columbia, both of which are in urban areas within 25 miles of these facilities. Planned Parenthood provides many services beyond abortion for women and men’s health. Excluding these facilities based on their location could have impacts beyond women’s health in the state.

Medicaid work requirements are popular

Another poll has found that a majority of voters support work requirements for Medicaid. One question left unanswered by these polls is the current understanding of the complexities of disability benefits in Medicaid. It often takes years to be eligible for categories of insurance that would be eligible for Medicaid work requirements waivers because of an inability to work and many disabilities that prevent working aren’t captured. While on its face a seemingly logical question designed to prevent fraud, the reality of the situation for many Medicaid beneficiaries prevents them from being able to work. Additionally, the point of Medicaid eligibility is to be a safety net and most people see it as such to fill the holes of coverage when they are unable to work due to changes in jobs.

Medicaid Buy-in has a New Face

I’ve been saying privately that Medicaid Buy-in needs a Congressional voice. It appears to have gotten that today with Sen. Brian Schatz (D-HI).

Politically, he’s been outspoken against many policies of the Trump administration and is often referred to as a rising star in the party. As this policy emerges, Schatz’s support could mirror that of Bernie Sanders and single payer plans. Younger Democrats don’t have the aversion to government sponsored programs that their Reagan-era pragmatic counterparts hold so the fit matches the epicenter of support for this plan. Whether this idea can capture the single payer support enjoyed by Sanders remains to be seen.