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It’s not a moonshot, but it still offers opportunities for a meaningful launch of underutilized Medicare benefits and exchange-based health insurance coverage.
Omnibus legislation is a tricky thing. It’s grand and encompassing and inspires hopes and dreams of generational change that can address large and stubborn obstacles to societal progress. It’s also an immediate target, susceptible to being picked over, priced into the stratosphere, dismantled. Such was the path of the proposed Build Back Better (BBB) legislation.
For supporters of population health and health equity, here’s the bottom line on its successor — the recently enacted Inflation Reduction Act of 2022 (IRA, Public Law 117-169). BBB would have meant more economic security, access to health insurance, and lower health care costs for a broad swath of low-income people in the United States. Instead, we got a scaled-back version that, while not the stuff of dreams, still has significant potential to meaningfully launch longstanding, underutilized Medicare benefits and exchange-based health insurance coverage.
Even as they work for still broader policy change, state officials, health care providers, and advocates who care about population health and health equity can maximize the IRA’s impacts by:
The IRA includes a number of significant health provisions that will have direct and indirect impact on people at the state level.
The IRA extends the expanded subsidies that were enacted by ARPA and which would otherwise have sunset as of the end of 2022, for an additional three years (See KFF Table). These subsidies have improved the affordability of exchange-based plans and demonstrably reduced the national rate of uninsured individuals – a great boon to states given that they help ensure more people have access to coverage and reduce the costs of uncompensated care for health providers.
NOTES: *Lawfully present immigrants whose household incomes are below 100% FPL and are not otherwise eligible for Medicaid are eligible for tax subsidies through the Marketplace if they meet all other eligibility requirements. **In the COVID-19 relief law, lawfully present immigrants in states that have not expanded Medicaid would continue to be eligible for marketplace subsidies. In addition, people receiving Unemployment Insurance (UI) are treated as though their income is no more than 133% of poverty for the purposes of the premium tax credit. This could extend premium tax credits to some individuals with incomes below poverty. SOURCE: KFF
The IRA expands eligibility for the federal Medicare Part D Low-Income Subsidy (LIS) Program. While states do not directly administer this benefit, improvements to LIS support millions of individuals who are dually eligible for Medicare and Medicaid benefits and who typically qualify for the Medicare Savings Programs (MSP), which defray premiums and out-of-pocket costs.
Depending on an individual’s financial situation, LIS covers:
Want more information on LIS eligibility? While it has not yet been updated to reflect IRA changes, ongoing please see this great chart produced by the National Council on Aging.
The IRA includes two provisions that endeavor to address the high rate of cost growth for Medicare-purchased drugs. Both have potential to influence the cost of drugs covered by Medicaid.
The first permits the federal government to negotiate the cost of a small number of the “negotiation-eligible” drugs on which Medicare spends the most, as follows:
The second requires drug manufacturers to make rebates if the cost of their drugs increases at a rate greater than inflation.
The IRA significantly defrays the out-of-pocket (OOP) spending that Medicare beneficiaries must make on prescription drugs, accelerating their path to federally paid coverage and freeing up income for other basic needs – such as food – that are instrumental to keeping people healthy and avoiding need for Medicaid-funded acute health care.
The IRA provisions include:
The IRA also mandates coverage of and eliminates cost sharing for adult vaccines covered by Medicaid and CHIP, reducing cost and administrative barriers to uptake of these vital preventative measures (See KFF Figure).
Over and above ensuring that beneficiaries, state partners, and stakeholders understand these new benefits, leaders can also take several actions to maximize their value.
Although states continue to be under-resourced for outreach and counseling on health insurance options, even without additional funding, there are untapped opportunities to maximize connections and education among the people who enroll or support state residents in health coverage and services. These connectors include:
Given that older adults and people with disabilities face many challenges of navigation, people responsible for leading health insurance counseling programs should be talking to one another to identify and understand likely pitfalls of eligibility among exchange coverage, Medicare, Medigap, and the Medicare Savings Programs.
It is well documented that a large percentage of eligible people — most notably, people who experience homelessness and people with serious mental health conditions — never manage to navigate the administrative hurdles to eligibility for Medicare-enabling federal benefits. States have opportunities to address this.
While efforts continue to try to build out ACA Medicaid expansion across all states, here are two strategies that states should consider to maximize health insurance coverage for their residents:
Among other health-related provisions related to social determinants of health, the IRA does not include the BBB proposals detailed below. (For expert commentary on these issues, see this Milbank Quarterly Opinion by Sara Rosenbaum of George Washington University.)
BBB proposed making CHIP permanent, and removal of that provision leaves CHIP subject to periodic congressional renewal and the vagaries of the federal budget process. Note that CHIP was last reauthorized in 2018 by the Bipartisan Budget Act (P.L. 115–123) for four years through the end of FY 2027 (September 30, 2027). It will then require renewal.
What States Can Do
As they did when authorization for CHIP was allowed to lapse in 2017, state leaders and their partners should advocate for permanency for this highly successful, bedrock source of coverage for millions of children.
States continue to have the authority to elect:
This proposal sought to build on the durationally limited enhanced Federal Medical Assistance Percentage (FMAP) for HCBS that was authorized under ARPA. These resources included planning grants, increases FMAP for implementation of HCBS improvements by six additional percentage points, and 80% FMAP for the administrative costs of implementing those initiatives.
States have the opportunity to track and report to CMS in detail on the impact of their ARPA HCBS funds by:
The IRA is something meaningful, and state policymakers and their partners should make sure they know what it includes. That said, they should also be looking to:
If we don’t do those things, many older adults and people with disabilities who qualify for newly enhanced supports will continue to go without help, and children will continue to experience gaps in coverage and may not be able to rely on CHIP coverage in the future. Both populations are relying on us all not to let that happen.
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