Alex Azar II, the new head of the U.S. Department of Health and Human Services (HHS), says federal commercial health insurance subsidies could look a lot different in 2020 than in 2019.
In the new Trump administration budget proposal, HHS spending on the major Affordable Care Act insurance subsidy programs could be about the same in 2019 as in 2018.
But the administration is calling for a shift to a new, state-based Market-Based Health Care Grant (MBHCG) program in 2020, and the MBHCG shift would lead to big changes in 2020, Azar told members of the House Ways and Means Committee on Wednesday, at hearing on the HHS 2019 budget proposal.
The federal government will start its 2019 fiscal year Oct. 1.
Azar spent most of his time at the hearing talking about efforts to control fight opioid abuse and strengthen public health programs.
During his opening remarks, Azar said the administration wants to bring down commercial health insurance prices by providing grants for state-level policymakers.
The MBHCG program would put control of subsidy cash in the hands of “those who are closest to the people and can best determine their needs,” Azar said.
A Trump administration discussion of the 2019 budget proposal shows that the MBHCG program would be part of efforts to “repeal and replace Obamacare.”
The discussion document does not show exactly which ACA subsidy programs the MBHCG program would replace.
Administration officials say they based their MBHCG proposal and other proposals for changing the Affordable Care Act commercial health insurance programs on the Graham-Cassidy-Heller-Johnson proposal.
The Graham-Cassidy-Heller-Johnson proposal, which was introduced in September by a team led by Sen. Lindsey Graham, R-S.C., would leave the ACA public exchange system in place; replace the current income-based ACA premium tax credit subsidy with a new age-based subsidy; leave the ACA risk-adjustment program in place; and replace the ACA reinsurance and cost-sharing reduction subsidy programs with state grants.
Numbers from 2019 Budget Detail Appendices
The Trump administration says, in the 2019 budget discussion, that the new MBHCG program would get $146 billion in funding in its first year, in 2020. Funding would rise to $220 billion per year by 2028.
The budget proposal detail appendix for HHS, and a similar appendix for the Treasury Department, show that HHS expects to spend about $8 billion on the ACA cost-sharing reduction subsidy program in 2018 and 2019. That program helps low-income exchange plan users pay their deductibles.
The Treasury Department expects to pay out about $40 billion per year, for 2017, 2018 and 2019, through the ACA premium tax credit subsidy program and the ACA Basic Health Program.
The premium tax credit subsidy program can help what consumers pay out-of-pocket for exchange plan coverage.
The Basic Health Program lets a state use ACA subsidy money to create a state-run buy-in program aimed at the lowest-income residents who do not qualify for Medicaid. Minnesota and New York state are now the only states that have Basic Health Program plans.
But the MBHCG program would also start to replace ACA Medicaid expansion subsidies as well as ACA commercial health insurance subsidies. It’s not immediately clear from the proposal how the MBHCG proposal would affect Medicaid funding, and what the allocation of cash for state Medicaid program and commercial health insurance subsidy programs might look like.
The House Ways and Means Committee has posted links to many resources related to the HHS budget, including a video recording of the Azar hearing, here.
— Read 10 Medicare for All and Graham-Cassidy Highlights, for Agents on ThinkAdvisor.