How Biden’s Executive Order May Impact Medicaid, ACA Marketplaces

Executive order’s impact on Medicaid

The executive order directed the Department of Health and Human Services (HHS), the Secretary of the Treasury, and the Secretary of Labor along with any departments or agencies that interact with Medicaid and the Affordable Care Act marketplaces to review the previous administration’s policies.

In regards to Medicaid, the executive order directed agencies to identify any policies that may undermine protections for patients with pre-existing conditions, reduce coverage, establish barriers to coverage, or reduce coverage affordability.

“The administration is sending an incredibly powerful signal about where they're heading on Medicaid policy and a return to viewing Medicaid as a key, foundational piece of the Affordable Care Act and a primary vehicle for coverage for people, particularly during the pandemic,” Jocelyn Guyer, managing director at Manatt Health, told HealthPayerIntelligence.

As the departments review past policies, two categories of Medicaid waivers are likely to see major changes under the Biden administration, according to Guyer.

First, the ten-year waivers that HHS approved at the end of the previous administration's term may not survive the new presidency. Indiana, Texas, and Florida each received a substantial amount of funding to put toward hospitals for the next ten years, an unprecedented allotment of time for such funding.

Second, block grants will face scrutiny under the new president. CMS issued the Healthy Adult Opportunity under the Trump Administration, which—despite the disputes around whether to call it a “block grant”—resembled a block grant.

Tennessee was the first state to receive approval for a Healthy Adult Opportunity in January 2021, but that waiver and others like it may not find favor in the sight of new CMS officials.

While it is not yet clear whether the Biden administration will reverse policies that have already been finalized, Guyer pointed out that the Secretary of HHS has significant authority over federal Medicaid funding. Thus, taking action against established policies may not be out of the question.

Guyer expected that, to the Biden administration, “strengthening Medicaid” would take the form of Medicaid expansion, particularly in states like Texas and Florida where significant gaps in low-income coverage exist and the pandemic's toll has been high.

She also projected that agencies and departments would demonstrate greater reliance on regulatory procedures, such as running statutes through the Office of General Counsel and the Office of Management and Budget.

However, it remained unclear to Guyer and others what the dynamic between the executive branch and the Congress will be. With a Congress that is evenly split between the two parties, that relationship could become a barrier to the administration’s plans for Medicaid policy.

Executive order’s impact on Affordable Care Act marketplaces

The executive order had two overarching aims for the Affordable Care Act marketplaces.

First, the order established a three-month long special enrollment period.

Most of the states that are not on the federal platform opened their own special enrollment periods in order to handle the influx of coronavirus-related unemployment and uninsurance in 2020.

However, the federal platform never opened for a special enrollment period, despite many stakeholders’ pleas including those of the Alliance of Community Health Plans (ACHP).

“We were quite excited that the president went forward with his promise to provide as much comprehensive coverage in care to as many Americans as possible,” Michael Bagel, director of public policy at ACHP, told HealthPayerIntelligence.

Bagel, along with other healthcare leaders, also applauded the administration’s decision to put more funding toward outreach and marketing efforts for the Affordable Care Act marketplace.

While ACHP and Bagel commended the Biden administration’s decision to open a special enrollment period, they also expressed concerns about the unique situation.

Payers typically prepare for members to be in a health plan for twelve months, during which time the payers can employ preventive services and chronic disease management strategies to help prevent health conditions from worsening and healthcare costs from rising.

In a special enrollment period, however, payers cannot pinpoint who will enroll in their Affordable Care Act marketplace health plans. Furthermore, these enrollment periods are typically unexpected, often a product of the economic climate, so health plans did not necessarily have an opportunity to prepare financially.

Moreover, special enrollment period enrollees have exhibited 34 percent higher healthcare spending than open enrollment members, according to a Health Affairs study. Emergency department and inpatient healthcare spending were the primary differentiators between the two groups of enrollees.

“We haven't called for any specific policies yet, but we have mentioned to the administration—and continuing to raise—that, while we are strong supporters of this enrollment period, there may have to be adjustments on the backend to ensure the stability of this market, especially after we see who enrolls,” Bagel acknowledged.

Joel Ario, managing director at Manatt Health, added that those who do enroll during a special enrollment period often do so because they have a specific reason to be aware of the exchange. It can be a challenging process to enroll on an Affordable Care Act marketplace health plan, so it takes a certain amount of motivation and awareness.

However, this special enrollment period could be a different story. Not only could higher spending on outreach and marketing raise awareness more broadly, but also the new administration dropped verifications for eligibility. That move streamlined the enrollment process further.

“If anything, we have seen several of the big carriers embrace this, because it is going to function more like a broad open enrollment period than it is like a narrow, technical, special enrollment period,” Ario told HealthPayerIntelligence.

While projecting enrollment gains can be a gamble for a special enrollment period, Ario estimated that the upcoming period could bring in one to two million new Affordable Care Act marketplace enrollees.

Apart from initiating the special enrollment period, the executive order also aimed to eliminate or reform policies that may undermine protections for patients with pre-existing conditions, reduce coverage, establish barriers to coverage, or reduce coverage affordability on the Affordable Care Act marketplaces.

Ario expected the executive order to result in reviews of the Trump administrations’ 2022 Notice of Benefit Payment Parameters, section 1332 guidance and demonstrations such as Georgia’s waiver, and rules that promote short-term limited duration health plans.