How Would Repealing the ACA Affect TennCare and CoverKids?

December 20, 2019 // Author: Larkin Raynor

The Patient Protection and Affordable Care Act

When the Patient Protection and Affordable Care Act (ACA) was implemented in 2014, approximately 20 million additional Americans received coverage in states that expanded Medicaid. In Tennessee, a state that did not expand Medicaid, TennCare and CoverKids enrollment increased by 200,000. Now, those new enrollees are one step closer to losing their coverage after the court’s decision in Texas v. United States, the lawsuit seeking to end the ACA.

In February 2018, Texas and a group of other states (including Tennessee) filed suit against the federal government, arguing that the individual mandate provision of the ACA is unconstitutional after the Tax Cuts and Jobs Act set the shared responsibility payment at zero dollars. After the federal government declared that it would not defend the constitutionality of the ACA, another group of states led by California stepped in to defend the law. On July 9, 2019, the U.S. Court of Appeals for the 5th Circuit heard oral arguments in this case. On December 18, 2019, the court ruled that the individual mandate is unconstitutional and sent the case back to the Texas district court judge to decide whether the remaining provisions of the ACA are constitutional. The outcome of this case has the potential to dismantle the ACA, eliminating or drastically scaling back programs that offer coverage to hundreds of thousands of Tennesseans, many of them children.

The ACA contains several popular provisions like Medicaid expansion, marketplace subsidies, protections for those with pre-existing conditions, and allowing young adults to stay on their parent’s health insurance plan until age 26. The ACA also named ten “essential health benefits” that all insurance plans must have, including things like preventative and wellness visits, maternity and newborn care, lab tests, and pediatric care. While these provisions are the ones most commonly associated with the ACA, there are several lesser known, but very important, protections that will be lost if the ACA is repealed.

Maintenance of Eligibility Standards for Children

The ACA prohibited states from making it more difficult for eligible children and families to enroll in Medicaid and CHIP coverage. Under this provision, states cannot change their eligibility standards with the intent of cutting enrollees. Additionally, applications for coverage must be reasonable—they cannot be onerously long, and they must be understandable.

Having healthcare coverage substantially alters the trajectory of children’s lives. When compared to their uninsured counterparts, children with Medicaid or CHIP do better in school, miss fewer days of school due to illness or injury, are more likely to finish high school, are more likely to attend and graduate from college, have fewer emergency room visits and hospitalizations as adults, and earn more as adults. In Tennessee, children’s coverage is vital; half of all babies born in Tennessee are covered by TennCare, half of all children in the state are enrolled in TennCare, half of all TennCare enrollees are children. CoverKids provides coverage to those children whose family’s income is just above the threshold for TennCare qualification. After passage of the ACA, the income threshold for Medicaid and CHIP eligibility was increased, and approximately 68,000 more children were covered under TennCare and CoverKids. Changing eligibility standards and application procedures would impose an additional hardship on the parents of these children, many of whom already face numerous daily burdens.

Medicaid Coverage of Children Above the Federal Poverty Level

Prior to the passage of the ACA, children under the age of six who were below 133% of the Federal Poverty Level (FPL) were eligible for Medicaid, while children between the ages of 6 and 19 were subject to a 100% FPL income limit. Children between ages 6 and 19 who were above the 100% FPL threshold but below 138% of the FPL qualified for CHIP. This distinction is important as Medicaid and CHIP cover different services; for example, immunizations, physical exams, and dental and vision insurance are all covered under Medicaid, but not under CHIP.

The ACA required all states to set the minimum threshold for Medicaid eligibility for children under age 18 at 138% of the FPL. Thanks to this provision, parents are not tasked with navigating the eligibility requirements, coverage, and cost sharing rules under both Medicaid and CHIP. This simplifies navigation of the healthcare system for parents and caregivers.

Repealing the ACA would allow states to change the income threshold, complicating the Medicaid and CHIP’s enrollment processes by requiring parents to navigate both. Additionally, reverting the income limit to pre-ACA standards would cause a large group of children to lose coverage, disproportionately affecting Black and Hispanic children. For perspective, if every state decided to lower its income floor to 100% FPL for ages 6-19, then nearly 5 million children would lose Medicaid coverage nationwide—a number that is close to 10% of the school age population in the United States.

Medicaid Coverage of Former Foster Youth

One of the more popular provisions of the ACA allows young adults to stay on a parent’s health insurance plan until they turn 26.  The Former Foster Youth Provision grants a similar benefit to those who were in foster care when they reached age 18. Under this provision, former foster youth, who typically have more complex medical needs than those who were not in foster care, are automatically eligible for Medicaid up to age 26.  This year in Tennessee, approximately 1,551 Tennessee children will age out of the foster care program and will be presumptively eligible for TennCare.

Simplified Eligibility Criteria

The ACA required a simpler eligibility assessment for most Medicaid beneficiaries. The new system is a uniform, income-based computation called Modified Adjusted Gross Income (MAGI), which determines eligibility based on the applicant’s taxable income. The ACA also eliminated asset testing for all Medicaid applicants. Examples of non-countable assets include a person’s primary residence, car, real or personal property, and life insurance policy.

Simplified Enrollment Systems and Procedures                                                    

The ACA required state Medicaid agencies to create streamlined application, enrollment, and eligibility redetermination processes. Additionally, it required ex parte renewals, meaning that the state should not ask an enrollee for additional financial information that is available from other government agencies. Tennessee’s response to this was the TennCare Eligibility Determination System (TEDS), which took seven years and $400 million to build.

In 2016, before TEDS was operational, the state contracted with a private vendor to make eligibility redeterminations manually, leading to many determinations being made on incomplete or inaccurate information. As a result, Tennessee saw the nation’s largest increase in uninsured children with about 83,000 children losing coverage between 2016 and 2018.

TEDS was fully implemented in March of 2019, and since then, child TennCare enrollment has increased by 17,150, but enrollment is still down by over 63,000 children since November of 2016 when the manual redeterminations began.

The state made an enormous financial investment in TEDS and only time will tell what effect it has on overall enrollment. If the ACA is repealed and TEDS needs to be redesigned, it spells more costs for Tennessee; if TEDS becomes obsolete, then the financial investment will have been wasted. However, the financial investment isn’t the most important consideration here—it’s the effect that a TEDS redesign will have on enrollees, given the large number of terminations that occurred during the manual redetermination period.

Healthcare Delivery System Reforms

The ACA provided an option for states to set up “health homes” to coordinate care for those with chronic conditions. A “health home” or “medical home” is not a physical place, rather it is an approach to providing comprehensive primary care. The health status and developmental progress of the patient and the primary care physician’s expertise with patients with special health care needs drive the health home process. Through a 2017 amendment to Tennessee’s state plan, the state created a health home model for adults with serious mental illnesses and children with severe emotional disturbances. The state aims to meet the needs of these patients by improving the quality of care that beneficiaries receive during the management of their illnesses, improving efficiency and decreasing the cost of care that beneficiaries receive by improving coordination of care between beneficiaries, their behavioral and physical health providers, and their social supports, and improving the overall beneficiary experience of care.

Additionally, the ACA established the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program, which builds upon decades of research showing that home visits by a nurse, social worker, or childhood educator during pregnancy and in the first years of a child’s life helps prevent abuse and neglect, supports positive parenting, and promotes child development. Although not a part of the Medicaid and CHIP programs, MIECHV works in tandem with them to improve the health of at-risk children through home visiting programs that reach pregnant women, expectant fathers, and parents and caregivers to children under the age of five. The federal MIECHV program supports the Tennessee Home Visiting Program, which, in 2018, had 3,145 participants, 1,566 households, and 19,014 home visits in 23 rural counties and 15 non-rural counties across the state.

The ACA also created the Center for Medicare and Medicaid Innovation (CMMI) to test delivery system and payment reforms that can lower costs while increasing access to care and improving quality. Two recently announced test models are the Integrated Care for Kids Model (InCK) and the Maternal Opioid Misuse Model (MOM). Each of these models function as a grant to state Medicaid agencies. InCK will help states and local communities in addressing priority health concerns for children, including opioid or other substance abuse and the effects of opioid use on families. MOM will support state Medicaid agencies and providers as they address fragmentation in the care of pregnant and postpartum Medicaid beneficiaries with opioid use disorder.

In 2017, Tennessee had the fourteenth highest rate of opioid overdose deaths in the United States—1,269 Tennesseans died from opioid overdoses. That same year, there were 1,090 self-reported cases of cases of neonatal opioid withdrawal syndrome in Tennessee. Programs enabled by the ACA, like, InCK and MOM could better the lives of thousands of people with opioid use disorder as well as the lives of future generations of Tennesseans.

Increased Medicaid Rebates to Lower Prescription Drug Costs

Since going into effect in 1991, the Medicaid Drug Rehab Program (MDRP) has helped offset the costs of most Medicaid beneficiaries’ outpatient prescription drugs. In order for the states to receive federal reimbursements for using a drug manufacturer’s products, the drug manufacturer must enter into a Medicaid national drug rebate agreement with the Secretary of the Department of Health and Human Services. The ACA strengthened the MDRP by increasing the minimum base rebate for brand name drugs from 15.1% to 23.1%. The ACA also extended the MDRP to cover prescription medications for Medicaid beneficiaries enrolled in managed care. States are able to negotiate their own supplemental rebates with drug manufacturers. Most states have, including Tennessee.

Increased Public Input for Medicaid and CHIP Waivers

Since the creation of Medicaid, section 1115 waivers have been available to the states. These waivers allow the Department of Health and Human Services to approve and evaluate experimental state-specific policy changes. Prior to the passage of the ACA, these waivers were not required to undergo a public review process. Under the ACA, a state submitting a section 1115 waiver must first hear public comments in the form of public hearings, a 30-day state comment period, and a 30-day federal comment period during which interested parties may voice their concern or support for the proposed waiver.

This provision made a difference earlier this year in Kentucky—a judge blocked the state’s waiver request pertaining to work reporting requirements, citing public comments as  influencing his decision. Tennessee is currently seeing this provision of the ACA at work as it relates to the Block Grant Proposal, the state’s latest section 1115 waiver proposal. With 1,650 comments submitted—over 93% of which were in opposition—the ACA has given Tennesseans the chance to have their voices heard.