WASHINGTON, D.C. – Last week, during questioning of a top federal official responsible for implementing health care reform, Senator Maria Cantwell (D-WA) said she may not support President Obama’s nominee for administrator of the Centers for Medicare and Medicaid Services (CMS) due to the administration’s failure to implement a key part of the law that could bring significant cost-savings to states and low-income consumers.
Marilyn Tavenner, Acting Administrator of CMS, was re-nominated by President Obama earlier this month. However, Cantwell said at a Senate Finance Committee hearing that she was concerned about supporting Tavenner due to the slow implementation of the Cantwell-championed federal Basic Health Plan Option (FBHO), which was enacted into law as part of the Affordable Care Act. CMS is tasked with implementing the FBHO.
According to Cantwell, the program was intended to be made available to states beginning in 2014 along with state exchanges and/or Medicaid expansion, but the Department of Health and Human Services (HHS) has delayed its implementation until 2015. Delaying Basic Health one year means low-income consumers will be forced to shoulder higher costs on the exchange or forgo coverage and depend on the state for health care costs in the interim.
During the hearing, Cantwell asked Jonathan Blum, Acting Principal Deputy Administrator and Director, Center of Medicare, Centers for Medicare and Medicaid Services (CMS), why HHS was delaying Basic Health cost-savings, effectively shifting the burden to states and low-income consumers until 2015.
“Somehow the agency seems to be very anxious – instead of implementing the law in 2014 as called by in the Affordable Care Act – seems to be anxious that somehow giving this population just above the Medicaid rate a more affordable benefit plan as outlined in the first chart is somehow against the interest of the overall Act,” Cantwell said at the hearing. “And if you could shed any light on that I’d certainly appreciate it.”
Blum responded: “I haven’t personally worked on this issue so I can’t speak to the decision-making behind it. I do believe – I do understand that Marilyn Tavenner has promised to provide you a schedule of how we plan to implement this provision. But we are happy to work with you and to help.”
“Well, Ms. Tavenner definitely will not have my support and I’m not interested in how she’s going to implement the Act. I’m interested in the commitment to the administration to live up to the way the Affordable Care Act’s provisions say it should be implemented,” Cantwell said. “Right now I can’t get anybody at CMS to own up to the fact that states under the law could receive 95 percent of the tax credits to provide cheaper care to the beneficiaries, instead of making them out-of-pocket expenses.”
“So I’m not interested in having the schedule of what date it’s going to be implemented. I’m interested in the agency making sure that it doesn’t thwart a more cost-effective solution to somehow save the exchange,” she continued. “When that’s really a false issue in my viewpoint.”
During the hearing, Cantwell also questioned Blum on the cost-savings of rewarding efficiency in the Medicare reimbursement system with the replacement of the current fee-for-service system with a new “value-based index” formula Cantwell authored that rewards quality of care instead of quantity of services.
Plans on the state exchange would be offered to consumers ineligible for Medicaid with income below 400 percent of the federal poverty level (FPL), while Basic Health would be offered to those ineligible for Medicaid with incomes between 138 and 200 percent of the federal poverty level. See this chart Cantwell referenced at the hearing today.
Compared to the exchange, a consumer would pay far less in average annual out-of-pocket costs under Basic Health: $96 compared to $434, according to 2011 estimates by the Urban Institute. Premiums would also be significantly cheaper: $100 under Basic Health compared to $1,218 on the exchange. See related chart Cantwell referenced today at the hearing.
Modeled after Washington state’s successful Basic Health Plan, the federal Basic Health Plan Option enables states to negotiate directly with health insurers to provide high quality health care coverage at a lower cost to those ineligible for Medicaid. The plan would be 95 percent federally funded under Cantwell’s provision. Washington state’s program has operated for more than two decades, providing quality and cost-effective managed care for those ineligible for Medicaid but below 200 percent of the federal poverty level.
In recent weeks, Cantwell has been pushing Administration officials to explain why the program isn’t being implemented in 2014, at the same time as state exchanges, as the law advises. On February 13, during a Finance Committee hearing, Cantwell questioned President Obama’s Treasury Secretary nominee and former White House Chief of Staff, Jacob Lew, about the delay and urged him to help push forward on its implementation. The following day, February 14, during another Finance Committee hearing, Cantwell questioned an HHS official on the agency’s support of the program.