Rebutting HHS Claims on State Flexibility
This morning HHS Secretary Sebelius has an op-ed in the Washington Post claiming that the health care law “already gives states most of the resources and flexibility they’re asking for.” In making that claim, however, the Secretary utilizes a very selective interpretation of the law’s provisions, ignoring those facets of the statute which have the greatest ability to harm state budgets:
CLAIM: “States have discretion…to offer a wide variety of plans through their exchanges, including those that feature health savings accounts.”
FACT: While the health care law doesn’t include a blanket prohibition on exchanges offering HSA plans, it does contain new restrictions on deductibles and cost-sharing that would prevent many current HSA plans from being offered. More importantly, the law does not specify that cash contributions made to an HSA will be counted towards the new minimum federal requirements under the new actuarial value metric. Section 1302(d) of the statute states very clearly that those parameters will be defined “under regulations issued by the Secretary.” In other words, it’s not states that will determine whether they will be able to offer HSA coverage – it’s the Secretary herself.
CLAIM: “States also have the flexibility to decide what benefits plans must offer.”
FACT: Section 1302(b)(1) couldn’t be clearer about who will decide the scope of the benefits package: “The Secretary shall define the essential health benefits” necessary to comply with the law’s individual mandate. States can exceed those Washington-imposed benefit standards, but they cannot waive them, no matter how high premiums will rise. (The richer benefit packages will raise premiums for individual insurance by as much as 30 percent on average, according to the Congressional Budget Office.) This “flexibility” is in reality a one-way street to higher premiums and health costs for states and families alike.
CLAIM: “The federal government will cover 96 percent of this [Medicaid] expansion.”
FACT: This claim misleads on several levels. First, the federal government will pay a higher share of the Medicaid expansion costs for the first few years – but beginning in 2020, will only pay 90 percent of the costs of the Medicaid expansion, not the 96 percent cited in the op-ed. Second, states will not get an enhanced match on any currently eligible Medicaid individuals who enroll in the program – so if currently eligible populations come “out of the woodwork” to obtain coverage as a result of the law’s individual mandate, state Medicaid spending will skyrocket. Just last month, Medicare actuary Rick Foster admitted in written testimony that a technical definition in the law could cause at least 5 million more people to enroll in the Medicaid program than originally projected – a potentially new multi-billion dollar fiscal headache that states cannot afford.
More important than the Secretary’s claims in the op-ed is what she DIDN’T say – she chose not to respond to multiple requests from states for more flexibility in the way they run their Medicaid programs now, and the way the health care law will be implemented in the years after 2014. In fact, press reports from yesterday indicate that HHS is planning to deny state requests for Medicaid flexibility – contrary to the spirit of the Secretary’s letter. As the facts above demonstrate, it’s all well and good for the Secretary to talk about giving the states the resources they need to implement the law – but at a time when numerous states face record fiscal pressures, governors need more assistance than bland bromides as they attempt to reform their broken Medicaid programs.