On March 20, 2018, Eliot Fishman of Families USA spoke with HealthWatch Wisconsin's Bobby Peterson. Excerpts of that conversation are below:
HWW: Today we have Eliot Fishman from Families USA with us. Thank you for participating in this interview for the HealthWatch Wisconsin Pulse Newsletter. We are interested in your perspectives on issues related to Wisconsin's 1115 Demonstration waiver. Eliot, would you like to give a little background on your work at Families USA and some of your work previously?
Eliot: Sure. At Families USA, I am the Policy Director. Families USA is very engaged at both a national and state level on advocacy and policy development for consumers in health care policy. That includes a lot of recent work defending the gains of the Affordable Care Act and trying to fight what are both legally and, in terms of their policy impact, very problematic Medicaid waiver proposals that have been coming up at the state level and starting to get federal approval. We also do a lot of work around health equity and delivery system reform issues, again, always with a consumer focus. Prior to my time at Families USA and particularly relevant for this discussion, I was at the Centers for Medicare and Medicaid Services, responsible for running the group that reviews the Medicaid 1115 waiver proposals, like Wisconsin's.
HWW: Thank you for taking the time to talk with us. As you know, Wisconsin submitted a section 1115 Medicaid Demonstration Waiver, seeking time limited Medicaid, work requirements, drug testing, premiums, and ER copays. Can you give us a little context for this surge in this type of application from Wisconsin and other states at the current time?
Eliot: We (Families USA) saw the Trump Administration signaling and inviting states' Medicaid Section 1115 Medicaid Demonstration Waivers that would restrict coverage right in the beginning, right after the transition and Trump's inauguration. This is the first time we have seen that Medicaid demonstration waiver authority used to take coverage away from people. [Waivers] have been very important tools for expanding Medicaid over time. And important tools to try out different ways of delivering Medicaid benefits, paying for them, or investing in the health care safety net. But, while there is a broad demonstration authority, legally it is not unlimited. One of the key dynamics that is playing out with this round of proposals coming in at this point from Wisconsin, and about a dozen other states, is whether they will be legally allowable. I think it is notable that Trump Administration has not acted yet on Wisconsin's proposal. I believe that is because they are concerned that some of what Wisconsin has proposed is not sustainable in court. I would tend to expect that almost all of what Wisconsin has proposed is not sustainable in court. I think the Trump Administration is leery of some of the specific elements that Wisconsin has proposed that are essentially unique.
HWW: One of the areas which we've noticed where Wisconsin appears to be somewhat unique from the other applications that have been reviewed is the proposed time limit of 48 months for Medicaid eligibility (with some contingencies, obviously). What are your thoughts on a 48 month time limit; is that workable for a state?
Eliot: I think it's a terrible idea. I'll start with why it's a terrible idea on policy grounds. It's really a paradigm that is taken from the world of cash assistance that doesn't apply to Medicaid at all. The idea of cash welfare benefits that "they're there if you need them" on a temporary, time-limited basis "while you get back on your feet" and "we don't want them to turn into a source of dependency" does not have applicability to Medicaid which now covers 70 million people, 75 million if you include the children's health insurance program and is just a basic part of our health insurance system. Not a temporary, time limited program for people. That is certainly true in Wisconsin. Medicaid is and has been for a long time a very important part of how health care gets paid for in Wisconsin and the whole "time limits paradigm" I think is just deeply misplaced.
I'll also note again, going back to a legal perspective, that there is no such thing as a time limit in the Medicaid statute. It's totally foreign to the Medicaid statute and legally inappropriate to create a new restriction like that on Medicaid coverage without going through Congress to try and do it under demonstration authority.
HWW: Wisconsin advocates are very curious and concerned about the Medicaid time limits. The request includes certain supposed safety valves that permit people to work and suspend the 48 month clock, but if they lose work again they can hit that 48 month limit. For example, if they had a job and they worked for 6 months, the clock would stop but it could pick up again for any period of unemployment. Part of the issue is we don't know the possible impact of this policy. We do not see the data or measures, at least in Wisconsin for what the churn rate is for childless adults currently enrolled in Medicaid, since it's such a relatively new program.
One of the areas that we look at in terms of a Section 1115 Demonstration Waiver by Wisconsin are the other barriers to enrollment, eligibility hoops and hurdles. What is the impact on Medicaid enrollment going to be because of this?
Eliot: Decades of experience have shown us that even seemingly modest paperwork requirements have a major impact on enrollment. And what Wisconsin is proposing is hardly modest. It's something that if we imagine what getting and maintaining employer coverage would be like if there were no human resources department assisting in that process and if you had to reestablish your eligibility every year and it required a whole lot of documentation about work status, drug testing, I think significant numbers of people would drop off their employer coverage every year or fail to get it in the first place. That is completely consistent with the history of Medicaid eligibility policies. One of the signature accomplishments both at the national and state level over the last 20 years in health care policy has been making Medicaid applications more online with more confirmation of eligibility using electronic databases so the burden is no longer on the applicant to document everything. One of the most frustrating and ironic things about this proposal from Wisconsin is that the state of Wisconsin was a national leader in those eligibility simplifications. Going back to the decade of the aughts, I was in state government in New Jersey in 2008, 2009 & 2010, and we looked to Wisconsin as a model for how to make eligibility determinations for Medicaid simpler and to get eligible people enrolled. Now Wisconsin is going the opposite direction in a way that is going to not only make a lot of people who need health insurance no longer eligible, but will have an even larger impact if it is approved and implemented on people who are eligible even under the new rules but just can't get through the thicket of paperwork that is going to be put in their way.
HWW: Right. One of many areas we're concerned about is the potential impact on uncompensated care (that includes bad debt and charity care). For context, in Wisconsin, uncompensated care for hospitals was at $900 million in 2015, which was a significant drop from 2013 when it was over $1.5 billion. We attribute that to the impact of the Affordable Care Act and some limited expansion of Medicaid that Governor Walker pursued for childless adults that prompted an important downward trend in uncompensated care. However, since the end of the Obama Administration and beginning of the Trump Administration, destabilization of the marketplace in Wisconsin, we have seen that figure rise up again to a billion and rising above a billion for 2017. What kind of impact on uncompensated care will these Medicaid hoops and hurdles have?
Eliot: I am really worried that we are going to see big drops in Medicaid enrollment and that will have implications for uncompensated care and it will also have implications for the health and in some cases the lives of the people who go without health insurance. There is a very direct correlation between making it as straightforward as possible for people to get health insurance and the levels of uncompensated care that hospitals and physicians and other providers have to provide. It's also really important to note that hospitals are going to keep their doors open, have to pay for that care somehow. Families USA has done an analysis called "The Hidden Health Care Tax" of how much of those uncompensated care costs are shifted into other people's insurance premiums because a hospital or other provider is bearing that cost. And it is significant. We estimated prior to the ACA that the cost of uncompensated care was about $1,000 per family, and that was done with a major actuarial firm Milliman, which is the state of Wisconsin's actuary, if I'm remembering correctly. A very reputable analysis that really dug into the way insurance is priced. So when we talk about uncompensated care, it's a health issue-a public health issue-but also a pocketbook issue not just for the people who lose the coverage but for everybody else who then has to pay for that care.
HWW: Sometimes ABC for Health describes uncompensated care as the socialization and redistribution of medical debt (emphasis added). People sometimes talk about socialized medicine, well when we cut back on Medicaid we increase uncompensated care that includes bad debt and charity care. Providers socialize the debt and everybody pays for it in the form of more expensive health care. Of course, there?s a much smarter way for us to deal with that. We are definitely in agreement with you on that concern.
Advocates in Wisconsin are also concerned about Gov. Walker's proposed Section 1332 waiver. The Governor directed the Insurance Commissioner to seek federal funding for reinsurance programs, which may be a good thing in Wisconsin. We believe the waiver may help stabilize the market. We also view the 1332 Waiver request reflects a pivot and a mild embrace of the ACA by Governor Walker
Our concern related to Wisconsin's initial proposal for 1332 funding mechanism that partially used state Medicaid lapse funds to match federal funding. We eventually convinced lawmakers not to earmark lapse fund to support the program. However, here is our deeper in the weeds concern: As Wisconsin develops an annual Medicaid budgets in a bipartisan fashion they'll generate larger and larger Medicaid lapse funds (surplus) at the end of the fiscal year that will then become sort of a "goodie bag" fund for the administration to dole out to special interests. But the surplus grows, generated by the hoops and hurdles created by the administration and put in the eligibility path people seeking or using Medicaid. In Wisconsin, the total Medicaid/CHIP population is about 1.2 million people and of course a lot of their family, friends and other folks are impacted by those cuts.
Do you see this in other states or think that this theory is tenable, that Medicaid lapse funds that go to GPR could become a funding opportunity for other, more favored interests by the Walker Administration?
Eliot: The specific dynamic with reinsurance I don't think I have seen in other states. I have seen where reductions in Medicaid enrollments are turned into a "piggy bank" for other priorities. It's terribly wrong. I think you alluded to why that's wrong, particularly when those other priorities are focused on special interests or higher-income people, it's just an upward redistribution of the state's resources to take Medicaid away from people and then use that money for people who generally need it a lot less. I think that dynamic is very much in play if you are using reduced Medicaid enrollment through these really legally questionable new barriers to fund reinsurance. We also, like you, support reinsurance as a way to stabilize the market. But it should be clear that the primary beneficiaries of reinsurance are unsubsidized Marketplace consumers with incomes above 400% FPL. Those people range from middle class incomes up to wealthier incomes for self-employed people. They are certainly deserving of help and their premiums have gone up a lot and we would like to see them get help. But if you fund that partly on the backs of taking away Medicaid from people, that?s an upward redistribution of income that?s really regressive and wrong.
HWW: As you may know, Governor Walker is running for re-election in 2018. The pressure is going to increase on the Walker Administration and probably from the Trump Administration on CMS folks to approve some aspects of the 1115 waiver. We expect Governor Walker to run a campaign on some of the welfare reform initiatives he pushed through the Wisconsin legislature and some of these Medicaid "reforms." Part of our concern is that even if the "reforms" don't get implemented for quite a while, they still serve as campaign fodder by the Walker Administration and the Walker campaign. How do you think CMS is going to react to some of these pressures, at least from your perspective having been there a number of years?
Eliot: We are in a new world, so I can't say that my experience at CMS is that much of a guide for how CMS is going to react. I do think it is significant and meaningful that CMS has not approved drug screening as a condition of Medicaid eligibility or time limits to this point. But what I don't know is if that's because there has been some sort of a legal/policy decision. What CMS does sometimes is simply not approve something for an indefinite period rather than actively disapprove it. It's actually somewhat unusual for CMS to formally disapprove a proposal. Sometimes they will simply not approve it for a long enough period of time that it's an effective disapproval. So that could be what's going on, but I don't know that. I do think that Governor Walker putting political pressure on the Agency which has political leadership which ultimately is very important in making decisions, can be relevant. That can be part of the picture and he can get the White House involved. There is a lot of uncertainty, but I would not rule out the factor that you're talking about-you've got a Governor running for reelection who feels that this could be important in his reelection campaign. I will though, just say politically, around the country, health care in general and Medicaid specifically has turned into a really strong political issue for Democrats. Whoever Governor Walker's opponent will be in his reelection battle-him or her-I would embrace the opportunity to run on Medicaid and health care.
HWW: We're in agreement there. We had a hard time in the last election trying to educate the public about Medicaid, even though the number of people as we mentioned has been fairly steady in Wisconsin, about 1.2 million people. The impact across the state for families, friends, neighbors, members of the faith community that interacts with folks has a strong constituency that just needs to be to be reminded of the importance. Some of the activity related to Medicaid block granting and some of the efforts over the summer to retool Medicaid really helped. It's an ongoing effort of public education and patient/client advocacy to remind people how important Medicaid is, to reinforce your point.
One last question: Wisconsin experienced some work requirements for childless adults receiving FoodShare that began in April 2015. The state bragged about 21,000 that found work because of that initiative, but did not talk about the 65,000 people that were terminated from FoodShare for failing to meet the work requirements. Is this the same type of landscape that we should expect with some of the Medicaid work requirements?
Eliot: Yes. Exactly. With the added complication that there is going to be a legal challenge, almost certainly. So, even if the work requirements component is approved by CMS, and I think it's very likely that it will be, they've been approving them in three states so far and I think they expect to approve all of the ones that get to their desk. It will then get challenged in federal district court and there will be an effort again almost certainly to enjoin implementation. It will take, I would guess, some time to work its way through the court system. In terms of what the implications will be as we've been talking about, there's both the people who lose coverage because of the requirements and probably a significantly larger group of people that lose coverage because of the paperwork involved even though they fulfill the requirement.
HWW: Thank you, Eliot. We appreciate your comments. Is there anything else you'd like to leave us with?
Eliot: It's really my pleasure. It's great to be in touch with you and your colleagues and hope we keep finding opportunities to work together.