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Community Health Choice CEO Ken Janda foresees more private coverage for the state and the country under health reform 2.0
Ken Janda’s more than 30 years in the healthcare industry has taught him one thing: Coverage matters. As the president and CEO of Community Health Choice, a managed Medicaid and Qualified Health Plan in Houston, he also knows that coverage alone isn’t the ultimate solution for the nation or for the state of Texas.
“Because this is Texas, we have to do it our own Texas way,” Janda says.
Texas Governor Rick Perry is one of the more passionate opponents to the Affordable Care Act (ACA) and opted out of Medicaid expansion. Meanwhile, the state ranks highest in the nation for rate of uninsured at 24.6%-among which, more than 63% are the working poor.
“In Houston particularly, people think of Medicaid as the traditional view of the ‘welfare queen’ sitting on the front porch, but that’s not who our members are,” Janda says. “Our members are the children of the working poor. These are people in minimum wage jobs, working part-time, who don’t have access to employer-sponsored insurance.”
There are many reasons for Texas’ large uninsured population, but less clear is how to achieve consensus on a solution to the issue.
Now under ACA, with federal dollars available, every state has an opportunity to drive coverage, and health plans have opportunities to gain new members. In Texas alone, $100 billion a year is available from the federal government for new Medicaid members under ACA-more than $800 million a month.
“Texas would clearly have been the biggest receiver of federal funds under the Affordable Care Act had we chosen to do the Medicare expansion,” Janda says. “That’s because we have so many people eligible. It’s over a million people that would get access to care if we expand the coverage utilizing the federal dollars available to us.”
Janda believes Texas has some catching up to do. He’s been working with stakeholders to craft a policy solution that would work for Texas and help refine ACA into “health reform 2.0.”
While the state lags behind in employer-sponsored insurance with only half of all employers offering health benefits, it does have a robust safety net system. Public and not-for-profit hospitals in major metro areas and Federally Qualified Health Centers provide a great deal of uncompensated care-$18.1 billion in 2011. But Janda says the fragmentation of the many coverage programs for women or children, for example, often leaves families with multiple sources of coverage, gaps in care and logistical hassles.
“What we really would do by expanding coverage in Texas is take away a lot of that fragmentation of different programs and instead bring it all into one unified program that would allow people to have a real medical home and then access to all the care that they need,” he says. “Because for any one individual, you don’t know if they are going to need a certain service. That’s kind of the backdrop that we have in Texas.”
Although it’s a large state with vast open spaces, Janda says Texas isn’t the land of cowboys and rural routes that many erroneously believe. About 85% of the residents live in urban and suburban areas.
“In fact, Texas, from a policy standpoint should look a whole lot more like California or New York than Wyoming or Montana,” he says. “Unfortunately, our politics are a little more Wyoming and Montana.”
Janda has been actively advocating for Medicaid expansion but has been careful to position the idea as more of a practical measure for low-income people to access healthcare with the benefit of federal dollars. These days, the word “Medicaid” has been like a lightening rod, he says.
Even though coverage is largely executed by private managed care plans, and the rate of spending growth per capita has consistently held low in the single digits, Perry doesn’t believe that categorical expansion is a good idea.
In February, Perry said in a statement: “Medicaid is a broken system-a fact President Obama has conceded in the past-and pouring millions more people into a system that’s already creaking from the strain is far from a long-term solution.”
Perry’s policy is a four-point plan that uses member cost-sharing; Health Savings Accounts; asset testing; and private coverage. MHE contacted his office by phone to obtain details about the plan, but calls were not returned.
Janda says one of the main concerns in the existing Medicaid program in Texas is the prevailing enrollment growth over the past several years. Even with federal money, the current Medicaid population of 3.6 million people continues to be costly for the state budget.
“The hesitancy on the part of our leaders to expand the program is that they see it eating up an increasing portion of the state budget, and I appreciate that,” Janda says. “As a taxpayer, I don’t want more tax dollars going toward healthcare for low-income people but rather I’d like there to be fewer low income people.”
Right now, the state is in a holding pattern. Janda and other advocates rallied for Medicaid expansion through the private market with what he calls “a more sophisticated version of what Arkansas is doing.” But progress stalled, and the debate over accepting federal healthcare funding under ACA will have to wait for January 2015.
The Texas solution might include an insurance exchange with different levels of cost and coverage for different populations. For lower income Texans, offerings would include low out-of-pocket responsibility and zero premiums with limited plan options. The exchange would tier up to more choices coupled with a sliding scale for cost sharing as household incomes increased.
“There was good bipartisan support for that at the legislative level, compared to some states where the governor saw the advantage of Medicaid expansion but couldn’t convince their legislatures to do it,” he says. “In Texas, it was certainly the other way around. I think the legislature was coming around and was willing to do something, but our governor took a very hard stand.”
Currently, Texas Medicaid is largely delivered through managed care plans like Community Health Choice. With 240,000 members, the plan predominantly covers women and children.
“We finance at Community Health Choice over 26,000 deliveries every year, which is more than any other managed healthcare plan in the Houston area,” Janda says. “We are one of five HMOs that contracted with the state Medicaid program in this area, but we have 50% of the pregnant women, and of course, therefore, 50% of the neonatal intensive care, too, which is a challenge from a financial standpoint.”
Janda says expansion would be especially helpful for new moms because right now, they lose their Medicaid coverage 60 days after delivery. On average, a Medicaid member in Texas only remains covered for six months, compared to 9.7 months nationally, according to the Associationof Community Affiliated Plans.
Ideally, a new state policy would bring together programs for families up to 250% of the federal poverty level into a program that would offer continuous coverage. In fact, two U.S. congressmen from Texas last year sponsored a bill that would require continuous coverage in Medicaid for 12 months nationwide.
But it’s not just a question of Medicaid. Lower-income Texans that have traditionally found coverage too costly are signing up for subsidized plans on the federally operated healthcare.gov site. Through March 1, more than 295,000 consumers had chosen a plan in Texas-the third highest enrollment in the country, behind California and Florida. About a quarter of the new members are in the coveted 18-to-35 year-old population.
Community Health Choice offers a low or zero deductible plan in the exchange. Leading into 2014, the plan’s projections include enrollment growth bringing it to between 350,000 and 400,000 total members over three years.
“Our [exchange marketplace] enrollment has been disappointing to be very honest with you,” Janda says. “We made a decision to try to provide as rich a benefit as we could in each of the metal tiers. Also when our actuaries came up with numbers-since we did not participate in individual markets before in Texas-we ended up having among the highest rates in each metal tier. Therefore, we are not getting nearly as many members as Blue Cross and Humana and some of the other plans that have much lower rates.”
He reached out to the Center for Consumer Information and Insurance Oversight in Washington in October to obtain permission to recast rates in the exchange, but the agency wasn’t able to grant a do-over for 2014 open enrollment. Janda says his team had geared up to promote the plan without a big marketing budget but instead through the cooperation of public hospitals and Federally Qualified Health Centers.
“That process has been slower and tougher than we thought,” he says.
Part of the reason behind the plan design for 2014 was to protect the local provider community from having to collect deductible payments at the point-of-care or chase it down from patients after the care was delivered. Copays are easier to calculate and collect. Undoubtedly, the ultimate plan structure is a work in progress for all the Qualified Health Plans.
“When Medicare Part D first rolled out, there were all kinds of different plans designed, and it took a couple of years for that to sort itself out," he says.
2014 is a year of experimentation and revision for the healthcare community under ACA. Even the authors of the law acknowledge that tweaks of varying degree will be necessary to make the intent of the law match up with the realities of implementation.
Janda says there is broad support for many of the ACA consumer protections such as the elimination of pre-existing condition exclusions and the lifetime maximum benefit. Where he sees opportunity to refine and replace is within the Essential Health Benefit package.
For one, he says, the benefits are too robust. Insurance isn’t the way to fund routine checkups, even though the services are valuable. Rather, he’d like to see more use of Health Savings Accounts and a safety net for catastrophic events.
“There are lots of Republicans paring back on the list of Essential Health Benefits and replacing it with opportunities for low-income people to have subsidies for those costs or a Health Savings Account like what’s being done with the Healthy Indiana Program,” he says.
Second, if health reform 2.0 were up to him, Janda says, he would reduce the burden for employers. Administrative tasks are eating up time and revenue for employers of all sizes, and the penalties for not offering insurance or not offering good enough insurance aren’t going to make a dent in driving health coverage.
He says the Obama administration has already acknowledged the problem by delaying the employer mandate in July 2013 and then again just a few weeks ago.
In addition, Janda would equalize the tax treatment between employer-sponsored and individual-market insurance policies.
“The Cadillac tax starts to get at that problem, but I don’t think you get at that fast enough,” he says. “There is a new tax credit provision in the Hatch/Coburn bill that sort of gets at that, and we have to look at it little bit more.”
Proposed in late January, the bill introduced by three Republican senators known as the Patient Choice, Affordability, Responsibility and Empowerment Act repeals ACA while keeping provisions to cover pre-existing conditions, eliminate lifetime limits on benefits and allow dependents to remain on their parents’ plan until age 26.
“We have to deal with the fact that people don’t like individual mandates,” Janda says. “For example in Medicare Part D, you pay a premium surcharge if you delay coverage. We could do something like that, but on the other hand, I don’t think the individual mandate is that powerful either. If that needs to be on the table, I am willing to put it on the table.”
As for the future, he says, collaboration is the only way to change the dynamics of the healthcare industry-even if it means reaching across the negotiating table or reaching across the aisle.
Follow Ken Janda on Twitter: @HealthyTexans.