Kyle Wingfield, president of the Georgia Public Policy Foundation, accepted an invitation to testify before the Georgia Senate Health and Human Services Committee on February 19, 2019, regarding health-care waivers as senators considered SB 106. His prepared testimony is printed in full below; view his presentation to the committee here, starting at the 11:45 mark.
GEORGIA SENATE HEALTH AND HUMAN SERVICES COMMITTEE
TUESDAY, FEBRUARY 19, 2019
KYLE WINGFIELD, PRESIDENT, GEORGIA PUBLIC POLICY FOUNDATION
Chairman Watson and members of the Senate Health and Human Services Committee:
Thank you for the invitation and opportunity to provide testimony about healthcare waivers. My name is Kyle Wingfield, and I’m the president and CEO of the Georgia Public Policy Foundation, a nonpartisan, nonprofit, 501(c)(3) research institute based in Atlanta. Since 1991, the Foundation has worked on policy challenges facing the state of Georgia in subjects ranging from education to transportation to criminal justice reform. We have also long been active on the subject of healthcare reform.
It is our view, after years of research and observation, that the states are best positioned to lead on the issue of healthcare. There is no law or series of laws governing healthcare in this country that will suit 325 million Americans. There are too many differences in health conditions and market conditions, in problems as well as resources and opportunities. We believe waivers offer the best way for Georgia to transform its healthcare market into one that works better for patients, providers and taxpayers alike.
As you may know, there are two types of waivers: Those to tailor the Medicaid program under Section 1115 of the Social Security Act[1], and those to tailor the premium tax credit assistance for individuals buying insurance under Section 1332 of the Affordable Care Act[2].
Senate Bill 106[3] would extend Medicaid to Georgians earning up to 100 percent of the poverty level with an 1115 waiver. These often are individuals whose care we are already subsidizing through less straightforward and efficient ways: either by mandating care for them in hospitals’ emergency rooms, or by paying higher private premiums to offset the losses providers incur in caring for them. Unfortunately, the same is likely to be true of those added to the Medicaid rolls if Georgia were simply to expand the program.
In some other states, most notably Oregon[4], those who gained Medicaid insurance have been even more likely to visit the ER for routine care than those who remained uninsured. And because Medicaid in Georgia on average reimburses providers for less than the cost of caring for patients[5], providers still lose money on many of these patients; this approach will not save rural hospitals. The worst part is that the low reimbursement rate means many providers are less likely to accept Medicaid than they are to accept Medicare or private insurance. This significantly limits Medicaid patients’ access to care, which – rather than mere insurance coverage – is what we should be concerned with.
A waiver would allow Georgia to cover those newly enrolled in Medicaid with greater flexibility and provide more meaningful access to care[6]. This could be done by enrolling them in private plans and funding accounts with which they could pay their out-of-pocket expenses and, ideally, aggregate funds from other sources such as employers, family, charities and so on. It could be done by contracting with a healthcare provider at a flat, per capita rate to offer recipients an exclusive network in which all their costs were covered; this is essentially what the often-discussed “Grady waiver”[7] would entail. It could also mean requiring the new recipients to work, enroll in a job-training course, or something similar – with the goal of expanding their opportunity to better themselves[8].
Some have asked why Georgia would not simply expand Medicaid as envisioned under the ACA. This is where the 1332 waiver comes in.
First, those between 100 percent and 138 percent of the poverty level are still eligible for subsidies on the individual exchange, HealthCare.gov. So it is not as if they are being shut out if Georgia addresses them via a 1332 waiver rather than an 1115 Medicaid waiver. Second, it is much easier to offer them better coverage – private insurance, with its greater access to care – with a 1332 waiver.
This is especially true depending on how the waiver is constructed. The Trump administration late last year issued new guidance about various ways states could use the 1332 waivers[9]. One is to employ some kind of risk-mitigation program, such as reinsurance or a high-risk pool. This helps directly subsidize care for the relatively few people who represent a very disproportionate share of healthcare spending: often, people with one or more chronic diseases that require years of expensive treatment. By subsidizing their costs separately, Georgia could keep their costs from spilling onto the rest of the market and driving premiums higher, as we have seen since the ACA’s passage. This would also go a long way toward addressing the problem of pre-existing conditions. Some states that have enacted these kinds of risk-mitigation programs have seen their individual-market premiums fall by double-digits.
The second type of innovation involves the same kind of accounts I mentioned for Medicaid. Currently, those eligible for premium assistance tax credits can only spend the subsidies on insurance premiums. That may leave them with a plan that doesn’t cost them anything out of pocket – until they actually want to use it, and find they face a large deductible. With an account-based system, beneficiaries could choose whether to spend all of their subsidy on the premium or perhaps buy a less expensive plan and retain the rest of their subsidy for their out-of-pocket expenses. This would encourage them to act more like consumers. It is similar to HSA plans, which have become increasingly common and popular among private employers offering insurance to their workers.
The third type of innovation is to authorize the subsidies to cover a wider range of products. Rather than only the ACA-compliant plans with their long list of benefits that may or may not be relevant to a particular individual, Georgians could potentially use their subsidies to buy association health plans, short-term limited-duration plans, or direct primary care services paired with indemnity plans or catastrophic-coverage insurance. In other words, let people decide which product is best for them.
In summary, waivers are a potentially powerful tool for Georgia to take charge of its own healthcare market and drive innovative changes that eventually yield benefits even for those with employer-sponsored coverage.
More information on healthcare and healthcare waivers is available on the Georgia Public Policy Foundation’s website at www.georgiapolicy.org/issues/health-care
[1] CMS overview of Sec. 1115 available here: https://www.medicaid.gov/medicaid/section-1115-demo/index.html
[2] CMS overview of Sec. 1332 available here: https://www.cms.gov/cciio/programs-and-initiatives/state-innovation-waivers/section_1332_state_innovation_waivers-.html
[3] Version of SB 106 cited is LC 33 7678-EC: http://www.legis.ga.gov/Legislation/20192020/181405.pdf
[4] “The Oregon Health Insurance Experiment”: https://www.nber.org/oregon/3.results.html
[5] “Hospitals 101,” Georgia Hospital Association, 8th edition, p. 14: https://www.gha.org/Newsroom/Reference-Guides
[6] “Medicaid Waiver Toolkit,” State Policy Network: https://spn.org/wp-content/uploads/2017/10/Medicaid-Toolkit-NOV-WEB3.pdf
[7] See discussion here: https://www.youtube.com/watch?v=QeQRQmNCzo4&t=538s
[8] “Healthy and Working: Benefits of Work Requirements for Medicaid Recipients,” Buckeye Institute: https://www.buckeyeinstitute.org/research/detail/new-research-by-the-buckeye-institute-finds-work-requirements-would-increase-lifetime-earnings-for-medicaid-recipients
[9] “CMS Administrator Discusses Initiatives to Strengthen Health Insurance Markets,” CMS newsroom: https://www.cms.gov/newsroom/press-releases/cms-administrator-discusses-initiatives-strengthen-health-insurance-markets
Kyle Wingfield, president of the Georgia Public Policy Foundation, accepted an invitation to testify before the Georgia Senate Health and Human Services Committee on February 19, 2019, regarding health-care waivers as senators considered SB 106. His prepared testimony is printed in full below; view his presentation to the committee here, starting at the 11:45 mark.
GEORGIA SENATE HEALTH AND HUMAN SERVICES COMMITTEE
TUESDAY, FEBRUARY 19, 2019
KYLE WINGFIELD, PRESIDENT, GEORGIA PUBLIC POLICY FOUNDATION
Chairman Watson and members of the Senate Health and Human Services Committee:
Thank you for the invitation and opportunity to provide testimony about healthcare waivers. My name is Kyle Wingfield, and I’m the president and CEO of the Georgia Public Policy Foundation, a nonpartisan, nonprofit, 501(c)(3) research institute based in Atlanta. Since 1991, the Foundation has worked on policy challenges facing the state of Georgia in subjects ranging from education to transportation to criminal justice reform. We have also long been active on the subject of healthcare reform.
It is our view, after years of research and observation, that the states are best positioned to lead on the issue of healthcare. There is no law or series of laws governing healthcare in this country that will suit 325 million Americans. There are too many differences in health conditions and market conditions, in problems as well as resources and opportunities. We believe waivers offer the best way for Georgia to transform its healthcare market into one that works better for patients, providers and taxpayers alike.
As you may know, there are two types of waivers: Those to tailor the Medicaid program under Section 1115 of the Social Security Act[1], and those to tailor the premium tax credit assistance for individuals buying insurance under Section 1332 of the Affordable Care Act[2].
Senate Bill 106[3] would extend Medicaid to Georgians earning up to 100 percent of the poverty level with an 1115 waiver. These often are individuals whose care we are already subsidizing through less straightforward and efficient ways: either by mandating care for them in hospitals’ emergency rooms, or by paying higher private premiums to offset the losses providers incur in caring for them. Unfortunately, the same is likely to be true of those added to the Medicaid rolls if Georgia were simply to expand the program.
In some other states, most notably Oregon[4], those who gained Medicaid insurance have been even more likely to visit the ER for routine care than those who remained uninsured. And because Medicaid in Georgia on average reimburses providers for less than the cost of caring for patients[5], providers still lose money on many of these patients; this approach will not save rural hospitals. The worst part is that the low reimbursement rate means many providers are less likely to accept Medicaid than they are to accept Medicare or private insurance. This significantly limits Medicaid patients’ access to care, which – rather than mere insurance coverage – is what we should be concerned with.
A waiver would allow Georgia to cover those newly enrolled in Medicaid with greater flexibility and provide more meaningful access to care[6]. This could be done by enrolling them in private plans and funding accounts with which they could pay their out-of-pocket expenses and, ideally, aggregate funds from other sources such as employers, family, charities and so on. It could be done by contracting with a healthcare provider at a flat, per capita rate to offer recipients an exclusive network in which all their costs were covered; this is essentially what the often-discussed “Grady waiver”[7] would entail. It could also mean requiring the new recipients to work, enroll in a job-training course, or something similar – with the goal of expanding their opportunity to better themselves[8].
Some have asked why Georgia would not simply expand Medicaid as envisioned under the ACA. This is where the 1332 waiver comes in.
First, those between 100 percent and 138 percent of the poverty level are still eligible for subsidies on the individual exchange, HealthCare.gov. So it is not as if they are being shut out if Georgia addresses them via a 1332 waiver rather than an 1115 Medicaid waiver. Second, it is much easier to offer them better coverage – private insurance, with its greater access to care – with a 1332 waiver.
This is especially true depending on how the waiver is constructed. The Trump administration late last year issued new guidance about various ways states could use the 1332 waivers[9]. One is to employ some kind of risk-mitigation program, such as reinsurance or a high-risk pool. This helps directly subsidize care for the relatively few people who represent a very disproportionate share of healthcare spending: often, people with one or more chronic diseases that require years of expensive treatment. By subsidizing their costs separately, Georgia could keep their costs from spilling onto the rest of the market and driving premiums higher, as we have seen since the ACA’s passage. This would also go a long way toward addressing the problem of pre-existing conditions. Some states that have enacted these kinds of risk-mitigation programs have seen their individual-market premiums fall by double-digits.
The second type of innovation involves the same kind of accounts I mentioned for Medicaid. Currently, those eligible for premium assistance tax credits can only spend the subsidies on insurance premiums. That may leave them with a plan that doesn’t cost them anything out of pocket – until they actually want to use it, and find they face a large deductible. With an account-based system, beneficiaries could choose whether to spend all of their subsidy on the premium or perhaps buy a less expensive plan and retain the rest of their subsidy for their out-of-pocket expenses. This would encourage them to act more like consumers. It is similar to HSA plans, which have become increasingly common and popular among private employers offering insurance to their workers.
The third type of innovation is to authorize the subsidies to cover a wider range of products. Rather than only the ACA-compliant plans with their long list of benefits that may or may not be relevant to a particular individual, Georgians could potentially use their subsidies to buy association health plans, short-term limited-duration plans, or direct primary care services paired with indemnity plans or catastrophic-coverage insurance. In other words, let people decide which product is best for them.
In summary, waivers are a potentially powerful tool for Georgia to take charge of its own healthcare market and drive innovative changes that eventually yield benefits even for those with employer-sponsored coverage.
More information on healthcare and healthcare waivers is available on the Georgia Public Policy Foundation’s website at www.georgiapolicy.org/issues/health-care
[1] CMS overview of Sec. 1115 available here: https://www.medicaid.gov/medicaid/section-1115-demo/index.html
[2] CMS overview of Sec. 1332 available here: https://www.cms.gov/cciio/programs-and-initiatives/state-innovation-waivers/section_1332_state_innovation_waivers-.html
[3] Version of SB 106 cited is LC 33 7678-EC: http://www.legis.ga.gov/Legislation/20192020/181405.pdf
[4] “The Oregon Health Insurance Experiment”: https://www.nber.org/oregon/3.results.html
[5] “Hospitals 101,” Georgia Hospital Association, 8th edition, p. 14: https://www.gha.org/Newsroom/Reference-Guides
[6] “Medicaid Waiver Toolkit,” State Policy Network: https://spn.org/wp-content/uploads/2017/10/Medicaid-Toolkit-NOV-WEB3.pdf
[7] See discussion here: https://www.youtube.com/watch?v=QeQRQmNCzo4&t=538s
[8] “Healthy and Working: Benefits of Work Requirements for Medicaid Recipients,” Buckeye Institute: https://www.buckeyeinstitute.org/research/detail/new-research-by-the-buckeye-institute-finds-work-requirements-would-increase-lifetime-earnings-for-medicaid-recipients
[9] “CMS Administrator Discusses Initiatives to Strengthen Health Insurance Markets,” CMS newsroom: https://www.cms.gov/newsroom/press-releases/cms-administrator-discusses-initiatives-strengthen-health-insurance-markets