Leavitt or Leave It: Consultant’s report suggests path for expanding health insurance coverage

Last week saw important developments in the  debate over expanding  health coverage for uninsured low-income Oklahomans. While it now seems certain that Oklahoma will not expand coverage at the start of 2014, the state finally appears to be moving along a path to accept federal dollars for expanding coverage in future years.

In November, Governor Mary Fallin announced that Oklahoma would reject federal funds under the Affordable Care Act (ACA) to expand Medicaid coverage for uninsured low-income adults, even though the federal government would assume 100 percent of the cost of this population for three years and 90 percent from 2020 onwards. This decision risks leaving well over 100,000 of the poorest and unhealthiest Oklahomans without health insurance options, stuck in a ‘coverage crater’, because they earn too little to qualify for federal tax credits to purchase coverage on new health insurance marketplaces, or exchanges. Oklahoma would be leaving over $8 billion in federal Medicaid dollars on the table over the next decade, while saddling hospitals and other health care providers with mounting uncompensated care costs.

While opponents of the Affordable Care Act balked at expanding traditional Medicaid coverage to a newly-eligible population, recent developments in Arkansas showed that the federal government is willing to work with states to expand coverage in alternative and flexible ways.  The Arkansas legislature has now approved a plan that would use federal Medicaid dollars under the ACA for premium assistance to purchase commercial health insurance plans.

In many respects, Oklahoma is especially well-situated to take advantage of federal flexibility to design a homegrown solution that meets our needs. Since 2006, we have operated Insure Oklahoma, a successful and popular premium subsidy program that uses state and federal Medicaid dollars to allow low-income workers to buy into their employer’s private coverage.  The program also has an Individual Plan component that offers a modified version of Medicaid to cover workers without access to employer coverage.  The program currently covers some 30,000 Oklahomans, one-third of whom have incomes below the federal poverty level.

Insure Oklahoma operates under a federal waiver that is set to expire at the end of 2013. Last week, Oklahoma received a letter from the federal government’s Centers for Medicare and Medicaid Services (CMS) stating that with implementation of the Affordable Care Act in 2014, “an extension of the Insure Oklahoma program without any changes is not possible.” In particular, CMS specified that the federal government will no longer approve enrollment caps, as currently exist in Insure Oklahoma. However, the letter expressed a clear willingness to work with Oklahoma to develop premium assistance options that would prevent those currently enrolled in the program from losing coverage:

Should the state be interested in exploring the use of premium assistance for the new adults group under the Medicaid expansion, given Oklahoma’s history of using Medicaid premium assistance to provide coverage options to Oklahomans, we would welcome working with you on such a model, consistent with our guidance.

Later in the week, a national health care consulting company, Leavitt Partners, delivered a preliminary report on an “Oklahoma Plan” to expand health insurance coverage.  Their proposal, designed to access federal Medicaid funds under the Affordable Care Act, recommends using Insure Oklahoma “as the base for a premium support program for adults up to 138 percent of the federal poverty level.” It envisions maintaining both components of Insure Oklahoma: premium subsidies for commercial employer-sponsored coverage and a modified public Individual Option.  The preliminary report also sketched out a number of reforms to improve care delivery and reduce costs.

Given the work that needs to be done and the desire to engage stakeholders in the process, the Leavitt report recommends  January 2015 as a realistic time frame for launching a new program. In the meantime, it suggests exploring ways to extend Insure Oklahoma past its current December 2013 expiration date. This would require negotiating changes to comply with new federal requirements, such as lifting the program’s existing enrollment cap, prior to the date (July 15th) when the state would have to submit a phase-out plan for Insure Oklahoma to CMS.  The Oklahoma Health Care Authority believes it will be able to negotiate a program extension.

Governor Fallin, who has previously made clear that she was looking to the Leavitt Partners report to form the basis for her Oklahoma Plan, responded favorably to the group’s proposal, stating that “the recommendations… should be considered thoughtfully by Oklahoma policymakers when the final report is presented at the end of June.”

With the federal government committed to paying the full cost of expanded coverage from 2014-16 only, a one-year delay represents a missed opportunity. However, by providing a framework for expanded coverage for the uninsured that would conform to the Affordable Care Act while building on Oklahoma’s existing successes in private-public health insurance partnerships, the Leavitt Partners’ preliminary proposal sets us on the right path forward.