Louisiana passes sweeping healthcare bill which locks in 8 key ACA protections...but with several MAJOR catches...

A couple of weeks ago I noted that Louisiana Governor John Bel Edwards, a Democratic governor in a pretty red state, was trying to take whatever measures he could to provide ACA protections at the state level in case the insane federal "Texas Fold'em" lawsuit against the ACA ends up tearing down the entire law:

On Tuesday, May 21, Governor John Bel Edwards issued an executive order launching the Protecting Health Coverage in Louisiana Task Force after efforts to have protections offered to Louisianans with preexisting conditions repealed.

“Protecting coverage for the 850,000 Louisiana residents with preexisting conditions is a top concern of mine and should be a top concern for all lawmakers. Unfortunately, the attorney general opted to join Louisiana into a lawsuit that threatens the coverage protections offered under the Affordable Care Act. One of the discussed solutions includes taking Louisiana back to the days of the high-risk pool, which only covered around one percent of people prior to the ACA. While we must take any step possible toward protecting our people, we can’t falsely claim we’ve completely solved this problem and risk tragedy for vulnerable people. Louisianans deserve better,” Edwards said.

The Attorney General referred to here is Republican AG Jeff Landry, who is one of the 20 GOP AGs & Governors who brought the Texas Fold'em lawsuit in the first place.

Well, the Louisiana state legislature (which is heavily dominated by the GOP, of course) has indeed passed a sweeping healthcare reform bill which makes many changes to how health insurance would work and be regulated in the state if the ACA is indeed swept away. In fact, it went through both the state Senate and House nearly unanimously (unanimous in the Senate, 90-9 in the House), which means it's virtually certain to become law even if Edwards decides to veto the bill.

Louisiana’s legislature has given final approval to a GOP-crafted alternative to Obamacare, leaving Democratic Gov. John Bel Edwards in a pickle as he faces reelection this fall.

The new bill, pushed by Republican Attorney General Jeff Landry, went through the House on a 90-9 vote last week, after previously passing the state Senate unanimously.

...His legislation, the Health Care Coverage for Louisiana Families Protection Act, calls for the state’s insurance commission to open the health market to anyone not covered by an employer’s plan. Companies would then bid to offer insurance.

The crux of the plan would be to establish a high-risk “guaranteed benefits pool,” a designation that would not be known to the buyers. Those plans would be subsidized by the state, with the money coming from a monthly charge on every policy sold in the state, as well as some Obamacare money.

Ut-oh. High-risk pools, as I've noted before, have a long and ugly history in the U.S. prior to the Affordable Care Act, mainly because they were almost always severely and chronically underfunded.

The governor has repeatedly said the legislature’s entire action here is unnecessary, as he believes patients with pre-existing conditions already can get coverage through Obamacare. Using pro-Obamacare studies, the governor’s office has said millions of Louisianians could be hurt by the new law, figures Mr. Landry’s office claims are wildly overstated.

Um...I'm in Edwards' corner here, of course, but this is a bit confusing. The whole point of this bill, for good or for bad, is what the state should do if the ACA is repealed due to Landry's lawsuit. If the lawsuit fails, then all of this becomes moot, but all 50 states should absolutely be taking action just in case that doesn't happen. Edwards' debate with state GOP legislators is about what actions they should be taking, not whether they should be doing so.

So what does this bill actually do? Well, let's take a look:

11.1. Rules and regulations; essential health benefits package

The commissioner shall promulgate rules pursuant to the Administrative Procedure Act to define "essential health benefits", to establish annual limitations on cost sharing and deductibles, and to define required levels of coverage. The commissioner shall adopt initial administrative rules before January 1, 2020. Notwithstanding any provision of R.S. 49:953(B) to the contrary, the commissioner may adopt initial administrative rules as required by this Section pursuant to the provisions of R.S. 49:953(B) without a finding that an imminent peril to the public health, safety, or welfare exists.

...11.22 Effectiveness

If a court of competent jurisdiction rules that the Patient Protection and Affordable Care Act, P.L. 111-148, is unconstitutional and the judgment of that court becomes final and definitive, the attorney general shall give written notification of the final and definitive ruling to the commissioner, the legislature, and the Louisiana State Law Institute. The provisions of this Subpart shall become effective ninety days after receipt by the commissioner of the written notification. However, no provision of this Subpart shall abridge or affect the provisions of insurance policies or contracts already in effect until such policies or contracts are renewed.

So far, this makes total sense...the provisions of the bill would only go into effect if the ACA is struck down completely. I'm not sure what the definition of "court of competent jurisdiction" is...if it's the 5th Circuit Court of Appeals, that's a problem; if it's the U.S. Supreme Court, that's reasonable.

§1123. Preexisting condition exclusions prohibited

A health insurance policy or contract issued or issued for delivery in this state after the effective date of this Subpart shall not impose a preexisting condition exclusion. This Section shall not limit an insurer's ability to restrict enrollment in an individual contract to open enrollment and special enrollment periods in accordance with other provisions of this Title.

The first sentence clearly states that newly-offered health insurance policies can not exclude coverage based on preexisting conditions. The second sentence appears to give insurance carriers the ability to restrict enrollment to Open Enrollment Periods and Special Enrollment Periods only...which is consistent with the ACA. Good.

§1124. Annual and lifetime limits prohibited

A health insurance policy or contract issued or issued for delivery in this 2 state after the effective date of this Subpart shall not do either of the following:

(1) Establish lifetime limits on the dollar value of benefits for any participant or beneficiary.

(2) Establish annual limits on the dollar value of essential benefits, as determined by the commissioner, to the extent not inconsistent with applicable federal law.

Again, so far so good...this seems to check off the "annual/lifetime limit" provisions of the ACA.

§1125. Coverage for dependent children

A health insurance policy or contract issued or issued for delivery in this state after the effective date of this Subpart that offers coverage for a dependent child shall offer dependent coverage, at the option of the policyholder, until the dependent child attains the age of twenty-six. An insurer may require, as a condition of eligibility for coverage in accordance with this Section, that a person seeking coverage for a dependent child provide written documentation on an annual basis that the dependent child satisfies the requirements applicable to dependent children in this Title.

This appears to check off the "young adults on their parents plans until age 26" part of the ACA. Louisiana apparently already has a state law allowing this up to age 24, but only if they're in school full time and unmarried.

§1126. Rate setting

For all health insurance policies, contracts, or certificates that are executed, delivered, issued for delivery, continued, or renewed in this state after the effective date of this Subpart, the maximum rate differential due to age filed by the carrier as determined by ratio shall be five to one. The limitation does not apply for determining rates for an attained age of less than nineteen years or more than sixty-five years.

This is half a loaf. On the one hand, it would prevent older enrollees from being charged 6 or 7 times as much as younger enrollees, which I understand was typical before the ACA. On the other hand, 5:1 is still a lot more than the ACA's 3:1 restriction.

§1127. Open enrollment

A health insurance policy or contract issued or issued for delivery in this state after the effective date of this Subpart may restrict enrollment in individual health plans to open enrollment periods and special enrollment periods to the extent not inconsistent with applicable federal law. The commissioner may adopt rules establishing minimum open enrollment dates and minimum criteria for special enrollment periods for all individual health plans offered in this state.

This is a good thing...it lets the state insurance commissioner set Open Enrollment Periods and Special Enrollment Periods.

§1128. Comprehensive health coverage

A. Notwithstanding any other provision of law to the contrary, a health insurance policy or contract issued or issued for delivery in this state thirty days or more after rules promulgated pursuant to Subsection G of this Section become effective shall, at a minimum, provide coverage that incorporates an essential health benefits package consistent with the requirements of this Section.

B. As used in this Section, "essential health benefits package" means coverage that:

  • (1) Provides for the essential health benefits defined by the commissioner pursuant to Subsection C of this Section.
  • (2) Limits cost sharing for coverage in accordance with Subsection E of this Section.
  • (3) Provides for levels of coverage in accordance with Subsection F of this Section.

C. The commissioner shall ensure that the scope of the essential health benefits package required pursuant to this Section is substantially similar to that of the essential health benefits required for a health plan subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019. The commissioner shall define the essential health benefits required for a health plan, provided the definition includes at a minimum the following general categories and the items and services covered within the categories:

  • (1) Ambulatory patient services.
  • (2) Emergency services.
  • (3) Hospitalization.
  • (4) Maternity and newborn care.
  • (5) Mental health and substance use disorder services, including behavioral health treatment.
  • (6) Prescription drugs.
  • (7) Rehabilitative and habilitative services and devices.
  • (8) Laboratory services.
  • (9) Preventive and wellness services and chronic disease management.
  • (10) Pediatric services, including oral and vision care.

Wow. Again, on the face of it, this seems to lock in all 10 of the ACA's Essential Health Benefits, as well as requiring all policies to limit cost sharing (Maximum Out of Pocket Costs) and provide minimum levels of coverage (Actuarial Value)...but let's see how those are defined:

D. In defining essential health benefits for purposes of this Section, the commissioner shall do the following:

  • (1) Ensure that the essential health benefits reflect an appropriate balance among the categories enumerated in Subsection C of this Section, so that benefits are not unduly weighted toward any category.
  • (2) Ensure that coverage decisions, determination of reimbursement rates, establishment of incentive programs, and designation of benefits are effected in ways that do not discriminate against individuals because of age, disability, or life expectancy.
  • (3) Take into account the healthcare needs of diverse segments of the population, including women, children, persons with disabilities, and other groups.
  • (4) Ensure that health benefits established as essential are not subject to denial to an individual, against the individual's wishes, on the basis of the individual's age or life expectancy or of the individual's present or predicted disability, degree of medical dependency, or quality of life.
  • (5) Provide that a qualified health plan shall not be treated as providing coverage for the essential health benefits package described in Subsection B of this Section unless the plan complies with the provisions of the Patient Protection and Affordable Care Act, P. L. 111-148, relative to coverage and payment for emergency department services.
  • (6) Provide that if a plan is offered through an exchange, another health plan offered through that exchange shall not fail to be treated as a qualified health plan solely because the plan does not offer coverage of benefits offered through the stand-alone plan that are otherwise required under Paragraph (C)(10) of this Section.

The first five of these bullets sound excellent...the sixth one is confusing and a bit worrying to me. It looks like it give carriers the option to offer non-ACA compliant policies on the exchange alongside the compliant ones...but that makes no sense since all policies are required to be compliant. I think.

  • (7) Annually review the essential health benefits package under Subsection B of this Section and submit a report to the legislature that contains the following:
    • (a) An assessment of whether enrollees are facing any difficulty accessing needed services for reasons of coverage or cost.
    • (b) An assessment of whether the essential health benefits package needs to be modified or updated to account for changes in medical evidence or scientific advancement.
    • (c) Information on how the essential health benefits package will be modified to address any gaps in access or changes in the evidence base.
    • (d) An assessment of the potential of additional or expanded benefits to increase costs and the interactions between the addition or expansion of benefits and reductions in existing benefits to meet actuarial limitations.
  • (8) Periodically update the essential health benefits package under Subsection B of this Section to address any gaps in access to coverage or changes in the evidence base the commissioner identifies in the review conducted under Paragraph (7) of this Subsection.

E. The commissioner shall establish annual limitations on cost sharing and deductibles that are substantially similar to the limitations for health plans subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019. The commissioner may increase the annual limitation as needed to reflect any premium adjustment percentage. For purposes of this Subsection, "premium adjustment percentage" means the percentage, if any, by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year, as estimated by the commissioner no later than October first of the preceding calendar year, exceeds the average per capita premium for 2019.

F. The commissioner shall define levels of coverage that are substantially similar to the levels of coverage required for health plans subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019.

E and F are rather amazing and amusing...they literally just say "copy whatever the ACA requirements were as of January 2019." This is used in several other places throughout the bill's wording. Considering that this bill is only necessary because of AG Landry's lawsuit, and is being pushed by Landry, the hypocrisy is stunning. He's basically admitting that his biggest problem with the Patient Protection & Affordable Care Act is...that it was passed by a Democrat at the federal level instead of by Republicans at the state level.

G. The commissioner shall promulgate rules pursuant to the Administrative Procedure Act to define "essential health benefits" pursuant to Subsection C of this Section, to establish annual limitations on cost sharing and deductibles pursuant to Subsection E of this Section, and to define required levels of coverage pursuant to Subsection F of this Section.

H. Within thirty days of the effective date of rules promulgated that define essential health benefits as required pursuant to Subsection G of this Section or within thirty days after promulgating rules adopting any changes to the definition of essential health benefits, the commissioner shall submit a report summarizing the definition of essential health benefits to the House and Senate committees on insurance.

I. This Section shall not be construed to prohibit a health plan from providing benefits in excess of the essential health benefits described in this Section.

In other words, insurance carriers are free to go above and beyond the bare minimum if they wish, which is already allowed of course but it's nice to see it put in writing.

§1129. Conflict of laws

In case of any conflict between the provisions of this Subpart and any other provision of law, the provisions of this Subpart shall control unless application of this Subpart results in a reduction in coverage for any insured.

This says that between this bill and any other state law, the stronger of the two takes command.

§1130. Applicability

A. The provisions of this Subpart shall be effective or enforceable only in the event that the tax credit authorized in Section 1401 of the Patient Protection and Affordable Care Act of 2010, P. L. 111-148, as amended by the Healthcare and Education Reconciliation Act of 2010, P. L. 111-152, and codified in Section 16B of the Internal Revenue Code, is held to be valid by a court of competent jurisdiction or is otherwise enforceable at law, or unless adequate appropriations are timely made by the federal or state government in an amount that is calculated in a similar manner as the tax credit in Section 1401 of the Patient Protection and Affordable Care Act.

BOOM. THIS is the critical part of the last point I made a couple of weeks ago: While I fully support locking in all of the "Blue Leg Protections" of the ACA, and support the Red Leg as well, those protections necessarily make insurance policies way too expensive for most people to afford without financial assistance...aka, the Green Leg, aka the federal tax credits and CSR assistance.

I estimated that Louisiana would need to generate at least $330 million per year just to replicate the ACA exchange subsidies for the 90,000 or so Louisians enrolled in federal ACA exchange policies this year (and this doesn't even begin to address the $2.9 billion or so they'd need to cover the balance of Medicaid expansion for 466,000 residents). The bill is basically saying that if the entire ACA is torn down, the whole bill becomes null & void.

Louisiana's total annual budget is around $30 billion/year, so the state would have to effectively raise taxes by at least 3.3% in order to match current ACA subsidies (and that doesn't include the $10 - $20 million/year which would have to be spent establishing their own state-based exchange, of course, since Louisiana relies on HealthCare.Gov).

This is one hell of a catch...but an understandable one, I suppose.

B. The provisions of this Subpart shall not apply to grandfathered coverage as defined in R.S. 22:1091(B)(4).

C. The provisions of this Subpart shall not apply to health benefit plans in the large groups as defined in R.S. 22:1091(B)(13) or to the large group market as defined in R.S. 22:1091(B)(14).

D. The provisions of this Subpart shall not apply to limited or excepted benefits policies as defined in this Title.

Now we get into the murkier part of the pool:

SUBPART F-1. LOUISIANA GUARANTEED BENEFITS POOL

...§1133. Louisiana Guaranteed Benefits Pool; establishment

A. The commissioner shall establish the Louisiana Guaranteed Benefits Pool which shall be a risk-sharing program to provide payment to health insurance issuers for claims for healthcare services provided to eligible individuals with expected high healthcare costs for the purpose of lowering premiums for health insurance coverage offered in the individual market.

Annnnnnd there you have it: A state-based High Risk Pool.

B. In establishing the program, the commissioner shall do all of the following:

  • (1) Examine Louisiana's historical experience with the Louisiana Health Plan high risk pool, R.S. 22:1201 et seq.
  • (2) Consult with healthcare consumers, health insurance issuers, and other interested stakeholders.
  • (3) Take into consideration high-cost health conditions and other health trends that generate a high cost.

§1134. Operation of program

A. The commissioner shall establish the Louisiana Guaranteed Benefits Pool with a framework and operation similar to other state best practices.

B. The program may be administered by either the commissioner or by an independent nonprofit organization.

§1135. Actuarial analysis

In establishing the program, the commissioner shall commission an actuarial analysis to do all of the following:

  • (1) Inform the development and parameters of the program.
  • (2) Evaluate how funds that may currently be utilized to pay the Health Insurance Provider Fee (HIPF) or may be recovered pursuant to litigation related to the HIPF may be used to contribute to the funding of the guaranteed 10 benefits pool.
  • (3) Estimate the necessary funding required to reach the premium reduction goals of the program, taking into consideration all of the above-listed sources.

Ummmm...it sounds to me like this basically leaves both the amount and sources of the High Risk Pool funding pretty much wide open, which seems like a pretty gaping hole...

§1136. Program parameters

In establishing the program, the commissioner shall provide for all of the following:

  • (1) The criteria for individuals to be eligible for participation in the program.
  • (2) The development and use of health status statements with respect to eligible individuals.
  • (3) The standards for qualification, including but not limited to all of the following:
  • (a) The identification of health conditions that automatically qualify individuals as eligible individuals at the time of application for health insurance coverage.
  • (b)A process pursuant to which health insurance issuers may voluntarily qualify individuals who do not automatically qualify as eligible individuals at the time of application for coverage.
  • (4) The percentage of the premiums paid to health insurance issuers for health insurance coverage by eligible individuals that shall be collected and deposited to the credit and available for the use of the program.
  • (5) The threshold dollar amount of claims for eligible individuals after which the program will provide payments to health insurance issuers and the proportion of the claims above the threshold dollar amount that the program will pay.

Yup, sure enough, this doesn't give ANY information about who would be eligible for the High Risk Pool...but it definitely means bringing back individual medical underwriting and that some people would end up being rejected based on their medical condition. It doesn't clarify how much the eligible enrollees would have to pay, or how much the High Risk Pool would cover. All of this is left completely at the discretion of the state Insurance Commissioner...

§1137. Approval by legislature

A. The commissioner shall submit the actuarial analysis required by R.S. 8 22:1135 to the Joint Legislative Committee on the Budget.

B. The Joint Legislative Committee on the Budget shall meet to review and approve the actuarial analysis, the details of the program as determined by the commissioner, and any required funding. The committee may also take any other action with respect to the program deemed necessary by the committee.

...which would then have to have his or her analysis approved by a state legislative budget committee who may or may not have the slightest background in actuarial science.

§1138. Enrollment or participation limitation

The commissioner shall not enroll an individual or permit any individual to participate as an eligible individual in the program unless the commissioner has received written notification from the attorney general of a final and definitive ruling by a court of competent jurisdiction that the federal Patient Protection and Affordable Care Act, P.L. 111-148, is unconstitutional pursuant to R.S. 22:1122.

Again: They're really making it clear that none of this gets greenlighted unless and until the ACA is struck down by the U.S. Supreme Court.

Section 2.(A) The commissioner of insurance shall take all such actions as are necessary to commission the actuarial analysis required by R.S. 22:1135, as enacted by Section 1 of this Act, before August 1, 2019.

Whoa...wait a minute. Today is June 13th, 2019. Assuming Edwards signs it (or he vetoes it and the legislature immediately overrides his veto) within the next few days that gives the state insurance commissioner just six weeks to crunch the numbers and write up a complete analysis on who they think should be eligible, who shouldn't, how much enrollees should have to pay, how much the program would have to pay and how much money would be needed from the state.

I'm not an actuary, so perhaps that's not unreasonable, but it sounds like a pretty short timeline to me.

(B) The commissioner of insurance shall submit the actuarial analysis as required by R.S. 22:1137, as enacted by Section 1 of this Act, and shall submit a report containing a detailed description of the proposed Louisiana Guaranteed Benefits Pool program to the Joint Legislative Committee on the Budget on or before March 1, 2020.

(C) Upon receipt of the actuarial analysis and report, the Joint Legislative Committee on the Budget shall meet at the next available opportunity to review and approve the actuarial analysis, the details of the program as determined by the commissioner, and any required funding pursuant to R.S. 22:1137, as enacted by Section 1 of this Act.

Section 3. This Act shall become effective upon signature by the governor or, if not signed by the governor, upon expiration of the time for bills to become law without signature by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If vetoed by the governor and subsequently approved by the legislature, this Act shall become effective on the day following such approval.

So, to review, here's the parts of the ACA which would be replicated at the state level in Louisiana:

  • Guaranteed Issue
  • 10 Essential Health Benefits
  • No Annual or Lifetime Limits
  • Young Adults stay on parents plan until age 26
  • Limited premium rate Age Band (5:1 instead of 3:1)
  • Allows for Open Enrollment Periods and Special Enrollment Periods
  • ACA-level Maximum Out of Pocket Costs
  • Minimum 60% Actuarial Value (I think)

...all of which is awesome, seriously! These are all things I'm cheering, although I do wish they'd stuck with the 3:1 age band.

Unfortunately, here's what wouldn't be replicated, assuming I'm reading the text correctly:

  • Community Rating (that is, they can go back to medical underwriting and could charge those w/pre-existing conditions more...which would presumably qualify them for the High Risk Pool instead)
  • No-Cost Preventative Services
  • The reinstatement of the Individual Mandate Penalty (to be fair, it's rare enough for blue states to be doing this, much less a red state)
  • Any actual funding, authority or even direction for the state to actually establish a state-based exchange. How they expect to have Open Enrollment or Special Enrollment Periods on a healthcare exchange without having the exchange, I have no idea...
  • Anything replicating the ACA's 80/20 Medical Loss Ratio
  • Any sort of reinsurance program

Oh, yeah...and while the bill makes reference to the $330 million/year in tax credits for eligible exchange policy enrollees having to be available in order for the bill to go into effect, it makes no mention whatsoever of Medicaid expansion. Those 466,000 Louisians on Medicaid expansion would be SOL if the entire law was struck down. On the other hand, if the entire law was struck down, that would also include the federal tax credit funding, which means the bill wouldn't be triggered anyway.

Basically, this bill only goes into effect if the final court ruling strips away the Blue Leg of the ACA while keeping everything else in place...presumably including Medicaid expansion.