NH Union Leader Promotes Flawed Health Plan That Could Raise Premium Prices

The New Hampshire Union Leader promoted a plan that would use Medicaid expansion funds available under the Affordable Care Act (ACA) not to expand Medicaid to cover more of New Hampshire's poorest residents, but to subsidize private insurance plans. However, under this plan, people would potentially pay higher premiums for their private plans or be left without health insurance.

In a November 17 editorial, the Union Leader advocated for using Medicaid expansion funds to extend New Hampshire's practice of providing subsidies for private insurance policies and mocked legislators who warned that this approach could leave consumers vulnerable to price hikes due to lack of marketplace competition:

That is why Senate President Chuck Morse's plan to use Medicaid dollars to subsidize private insurance for qualified Granite Staters is such a great proposal. He called the Democrats' bluff. Now they are throwing up every objection that they can, even ones that undermine the party's position on Obamacare.

State Senate Republicans had proposed moving newly Medicaid-eligible Granite Staters into subsidized private insurance plans purchased on Obamacare's state insurance exchange, and doing that by 2015. Last week Democrats hilariously complained that this was “unworkable” (Gov. Maggie Hassan's word) because there is no competition on New Hampshire's exchange, which is serviced by only Anthem and Delta Dental.

By pushing for Morse's proposal, the Union Leader failed to take into account two major impediments to the Senate plan.  First, a special waiver must be proposed by the state and approved by the federal government before Medicaid funds can be used for private insurance. Knowing this could be a lengthy process, other states that have taken this route have already submitted proposals for approval. The Senate plan backed by the Union Leader forecasts only one year for federal approval, and would end expansion efforts if the plan had not been approved by the end of that year. A different proposal by the House also recommends using Medicaid expansion funds to offer private insurance subsidies, but that plan does not foresee moving people to private plans for at least three years.

The second problem with the Senate plan is the lack of competition in the state exchange marketplace. With only one provider on the marketplace so far, New Hampshire's exchange is not competitive enough to make the Senate private subsidy plan viable, nor does it have the time to grow competition before the Senate plan would be implemented. According to the Boston Globe:

Insurance Commissioner Roger Sevigny cautioned the Senate panel that its timeline is ambitious. Sevigny said he has not heard of any companies preparing to enter the marketplace as the Senate plan envisions in 2015 to join the lone provider, Anthem Blue Cross and Blue Shield.

The House plan rejected by the editorial is deemed more practical, because it would only shift Medicaid funds to private insurance if three providers are competing on the exchanges. According to Forbes, competition is vital to keeping prices low and quality of care high:

In the future, to stay competitive, insurers will need to increase value for their customers. They'll do so by including in their networks only those physicians and hospitals that provide higher quality at a lower cost. This will require providers to improve the processes and outcomes of the care they deliver.

This shift in competition will begin a virtuous cycle. The lower cost, higher-quality insurance plans will attract more people. A growing membership base will give them greater leverage to demand increased efficiency, higher quality and superior outcomes from doctors and hospitals in their networks. This, in turn, will result in further market-share growth as more consumers see the value.

As the Concord Monitor further explained:

Implementing Obamacare and expanding access to Medicaid, let alone doing so under an as-yet unwritten plan that requires federal approval, is enormously complicated. Almost every part of every endeavor is in flux. So without getting into the deep weeds, the sticking point is this: The governor and the House want the people newly eligible for Medicaid to be able to obtain coverage under the standard Medicaid programs now being overseen by three managed care companies until at least 2017 before shifting them to private plans with what amounts to a voucher to subsidize the cost. The added time could allow players other than Anthem, the only insurer signed up to participate in the health care exchange marketplace, to join, thus increasing competition and lowering costs.