Indy Q+A: Former Medicaid administrator talks cuts proposed in now-stalled Senate health care bill

The changes to the Medicaid program proposed in the latest draft of Senate Republicans’ health care bill, which now appears dead, are “bad across the board” for Nevada, a former administrator of the Medicaid and Medicare programs said Monday.

For the last couple of months, former Centers for Medicare and Medicaid Services Administrator Andy Slavitt has traveled around the country, hosting town halls to explain congressional Republicans’ legislation to repeal and replace the Affordable Care Act and urging people to tell their senators and representatives to vote no. He decided to pay Nevada, which has been a focal point of the health care debate given Republican Sen. Dean Heller’s concerns over the legislation, a visit ahead of an expected vote on the legislation this week.
But Senate Majority Leader Mitch McConnell announced over the weekend he was delaying a vote on the health care bill, since Senate Republicans didn’t have enough support to pass the legislation with Arizona Senator John McCain absent while recovering from a recent surgery. And the bill appeared all but dead in its current form on Monday night with Senator Mike Lee of Utah and Senator Jerry Moran of Kansas declaring they would vote against the initiative.
Republicans could afford to lose no more than two of their members for the bill to move forward. Lee and Moran joined Senator Rand Paul of Kentucky and Senator Susan Collins of Maine, who declared their opposition to the new draft of the bill when it was released last week. Several other senators, including Heller, expressed concerns over the legislation’s cuts to the Medicaid program but were still wavering over whether to vote against the legislation.
Though the bill appears dead for now, conversations over the future of the Affordable Care Act and health care in the United States generally will continue. McConnell said Monday night that the Senate will vote to take up the House's bill, a full repeal of the ACA with a two-year delay.
The Nevada Independent sat down with Slavitt Monday afternoon before the announcement from Lee and Moran about the health care bill and the future of the Medicaid program in the state.
This interview has been edited for clarity and length.
The Nevada Independent: Nevada has been ground zero for many of the conversations surrounding the future of health care in the United States. To start off, is there anything in the new draft of the BCRA that might give Governor Sandoval or Senator Heller any reason to change their position of opposing the bill?
Slavitt: The bottom line of this draft is that there's nothing that can be done to change the underlying impact of this bill because it cuts so deeply and so severely into not just the Medicaid program and into subsidies for low income people but so deeply into Governor Sandoval's priorities. There's not a workable deal — other than starting over — that wouldn't upend all the progress that's been made here in Nevada to reduce the uninsured rate, uninsured kids and really make tremendous progress. Anything you see in these drafts, any of these amendments, many of them make things worse. Some of them, even if they put a little bit more money back in, it's pennies on a dollar compared to what's being taken out.
Administration officials have reportedly suggested Nevada could use a waiver of Medicaid rules to use federal funding — through a so-called “cost sharing wrap” — to help low-income Nevadans buy private insurance and fill any coverage gaps created by a phaseout of Medicaid expansion. Is that a feasible alternative?
Since I oversaw the waiver program under President Obama, I can tell you with full clarity waivers have to be budget neutral. If the administration now argues that they can get Nevada some makeup money for the money that's going to be lost — for the billions of dollars that are going to be lost — through a waiver process, it's just not true. The plan, as I understand it from the administration, is to convert people off of Medicaid, to give them a high deductible policy and I think you end up with, in rough numbers, people who make $14,000 a year leaving Medicaid and getting a $6,000 deductible policy. There's no answer for the question of, "How do you help people afford those policies?" You can't. That's why the uninsured rate goes up so much. There's no waiver that can be created that solves that problem because they have to be budget neutral.
An amendment proposed by Texas Senator Ted Cruz would allow insurance companies to offer high deductible, non-ACA compliant plans, so long as they provide at least one plan that complies with the federal health care law. Will most people be able to afford ACA-compliant plans?
I don't think the premiums are going to be affordable, and I don't think the actuarial value that people will get will be affordable. I think the administration in Washington now believes the Medicaid program costs too much money, costs states too much money, and I think they've been fairly clear about the fact that while they won't say that they want to cut people from it, that's the choice that they're willing to make. That's not a policy decision that is in any way consistent with the great progress that Governor Sandoval has made, nor is it consistent with the very clear, stated remarks of Senator Heller over what his priorities are. I don't think there's any way to square the circle.
What’s the fiscal impact of the the Senate health care bill? To what extent does it save the federal government money in the long run?
At the end of the day I'm not sure it's going to have that much of a fiscal benefit, but it'll have some small fiscal benefit for the federal government. It'll do that at the expense of having an enormous fiscal expense for the states. Then there's this view that's chiefly been articulated by House Speaker Paul Ryan that if people get off Medicaid they'll just get jobs. The fallacy in that is first of all we know that the majority of people on Medicaid actually work, they just work jobs that don't have benefits, and if they could be offered benefits through their employer, I'm sure they'd love that. But simply cutting money from the state, cutting money from local hospitals and cutting money that goes to the Medicaid program won't instantly cause employers to start offering coverage. What it really accomplishes is it allows the federal government to fix their investment in Medicaid. That's what it allows for, and then it's up to the states and families to figure out how to manage that crisis.
Some Republicans have suggested that taking the money currently being spent on the whole Medicaid program to instead subsidize private insurance plans for low income individuals could be more cost effective in the long run. Would it be?
That is how Medicaid works. Seventy-five percent of Medicaid is run through private companies, through managed care. As a result, we've had very low costs in Medicaid. The way Medicaid is talked about now by the federal government you'd think they didn't know that. Medicaid costs 28 percent less than commercial insurance. It's had near flat growth and costs over the last seven years. So it is really run that way.
But none of this is to say that there aren't improvement opportunities in the Medicaid program or that critics of the Medicaid program who want it to be run more efficiently aren't correct. There are real reform opportunities. In fact along with a Bush administration official I wrote a piece in JAMA last week about six bipartisan reforms that really can be worked on, but they need to be worked on a bipartisan basis at the state level. They're about improving outcomes and care for the people in the Medicaid program. They're not about doing what this bill does, which is just hard cut 35 percent of the program and say, “Okay, you figure it out.”
If Medicaid expansion dollars are phased out, states will be left to choose whether to raise taxes, reduce the population they cover, cut services or lower reimbursement rates. How do states choose which one of those paths to go down?
Well it's really a Sophie's choice. If you're cutting 35 percent of Medicaid, the simple way to think about it is you're cutting 35 percent of people off of Medicaid, you're cutting their services by 35 percent or you're cutting what you reimburse for Medicaid which is 35 percent. Your fourth option is you can raise taxes, but I don't think that's very realistic.
If you look at those things, the first thing that goes — and I think the administration has been very clear that they want to cut people they think are less worthy of getting care. I don't know who defines that. The second thing that happens, unfortunately, is you take the family that has a child with a disability where a personal home care worker comes everyday so the parents can go to work, so the kids can go out and get fresh air and socialize and things like that, and you say, "Well, we can only come once a week. We can go twice a week." You start to trim services where you can.
Does it make any difference whether Medicaid expansion dollars are phased out over three, five or seven years?
It doesn't for a couple reasons. First, you're cutting people off. Second, with the way they have it written people's income levels bounce in and out so frequently of the Medicaid program, if they have a summer job or they have seasonal work once they bounce out they can't bounce back in. Third, many states — once the federal match drops below a certain point — are going to be required to no longer support people on Medicaid.
The Senate health care bill will change the way Medicaid dollars are allocated to either a per capita or block grant structure. Is one better than the other for states?
It's bad across the board. The reason you know this is because many many senators, even the ones who are embracing per capita caps are asking for exceptions for themselves. So they're putting tribal things outside of the cap or they're putting things like Zika outside of the cap. Well, the reality is it's because the cap itself is a bad idea. We can't sit here today as a federal government — talk about federal bureaucrats getting in the way of health care — in 2017 and say this is how much money the health care system should be spending in 2025.
The report from the Congressional Budget Office on the new draft of the bill hasn't come out yet, but based on what you've seen, do you think there's any reason to the projected number of uninsured will drastically change?
It's not going to dramatically change the number of uninsured, and those numbers are intended to be very much range numbers anyways. I don't care if the number is 22 million people, 24 million people, 15 million, 18 million, 12 million people — to me, it all really sends the same message, and unfortunately I think what we're going to see here is a tremendous number of people losing coverage.
What changes to the Affordable Care Act would be helpful and feasible?
Well I think the short-term thing you want to do is pay the cost sharing reduction payments, because if you do that, you'll instantly bring down the cost of insurance for 2018 by about 30 percent. To the extent that there's enough time left in the year when they did it, you would see more people enter the market, so making that commitment is really really important.
The other thing I think they should be focused on — if you look back at the record of the ACA and where it could be improved upon, you'd say they probably should have subsidies paid for people who are above the 400 percent of poverty level. The only people who don't get any form of federal support are people above 400 percent of poverty level, so I think you've got to do that both for fairness sake as well as to support the middle class.
Then the other thing we need to focus on is more reliable competition policy. We have parts of this country, particularly rural communities, where there is a lack of competition. It's not just a lack of insurance companies, it's not enough hospitals. Focusing on competition, focusing on affordability, focusing on fairness, those are really surgical changes, they're not very expensive changes that can be done quite well.
Fourteen counties in Nevada won’t have any plans available on the exchange next year. The White House attributed that to what they described as the instability caused by the Affordable Care Act. What could be done to address any instability causing insurers to pull out?
I will tell you that if you made a commitment to paying cost-sharing reduction payments, that would be fixed within 30 days. The only reason they're not committed is not because they're not making money. I mean, yes, there are still issues in rural communities and competition, that's been there and it's going to continue to be there, but the challenge is the administration has created so much uncertainty by not making cost sharing reduction payments.
Is there anything you can see that could be offered to Senator Heller or Governor Sandoval that would mitigate the impact to Nevada?
Nothing policy-wise. There's always political gifts. I'd like to think that that's not the kind of thing that would persuade Governor Sandoval and I would certainly hope Senator Heller. I recognize he's under an inordinate amount of pressure, but the kind of pressure they're putting on him feels much more political than it does policy. It's the big fundraising apparatus of the Republican National Committee. That's the big heavy, and if that's the best they have to offer I'd like to think that the senator here is going to look beyond that.
If I were a senator right now, I think the biggest thing that isn't being said that is a big risk is all the things you're voting on that you don't yet know the impact of. What I mean by that is every day there's a new report of the impact on disabled kids — it turns out it's much more negative than people thought — impact on vets, impact on rural hospitals. We're just discovering them because we haven't had the normal committee process. No one is going to forgive them for that six months from now, a year from now, two years from now when they've taken this vote and there's been all this horrendous impact. There's all the more things they don't yet know which should make every senator very uncomfortable voting for this bill, because I think all of that will come back to haunt them.