What does the 2016 election mean for behavioral health?

political-shift2The results of the 2016 election portend significant changes to the health care sector. Its implications open a Pandora’s Box of questions, and it’s fair to ask, “What does this election mean for behavioral health?” With the last decade’s reforms of mental health parity and Medicaid expansion, it’s this question that bubbles to the surface as the most pressing – and arguably the most interesting.

However, before we can start to answer it, we need to understand where we are now. Historic changes in health care policy defined the last eight years. The Affordable Care Act (ACA) and the Mental Health Parity and Addiction Equity Act (MHPAEA, or Federal Mental Health Parity) redefined the managed behavioral health industry. Approximately, 13 million low-income adults became eligible to enroll in Medicaid – childless adults up to 138% of the Federal Poverty Level. We knew at the time of the law’s passage, and especially know now, that this newly insured group of Americans has a higher prevalence of mental health and substance use disorders (SUDs) than those previously insured. Consequently, the managed behavioral health sector has grown exponentially.

Take Beacon Health Options as an example. Beacon’s business has grown materially since the ACA passage; existing customers added significantly to their membership, and new customers contracted with Beacon to meet the new demand of the ACA. Today, more than 80 percent of Beacon’s revenues are through government-sponsored health care programs, including Medicaid, Medicare, Exchanges, Indigent Care Funding, or State Employee Health Plan programs.

In brief, the next two years promise to frame up a debate that will be less about political party affiliation and more about federal and state government perspectives and each’s fiduciary responsibilities.

In addition, implementation of the MHPAEA increased access to more behavioral health benefits than ever before for both commercially and publicly insured individuals. SUD is now a covered benefit in virtually all insurance plans for all payers. Employer plans cover residential and community diversionary service options. Quantitative limits on treatments have been eliminated. Co-pays and deductibles for behavioral health benefits now equal medical benefits.

What will change and how dramatically?

With this background, the narrow question for Beacon and the behavioral health industry generally is: What will a Trump administration and a majority Republican Congress mean for the ACA, especially the Medicaid expansion, and for Federal Mental Health Parity?

Let’s start with the easy one. Federal Mental Health Parity is here to stay. Some changes in regulatory guidance may make it a bit easier for businesses to implement, but in the main, it will not change, especially as we are likely to see some federal action to address the public health crisis of opiate addiction. Without Parity, access to treatment will suffer. To that end, Beacon will continue its work with federal and state regulators to ensure parity laws and regulations promote access to quality behavioral health care without cumbersome compliance and administrative mandates that add little value.

The future of the ACA is more complicated. Certainly, there will be meaningful legislation in Congress in 2017 to change its course. Many legislators campaigned against the ACA for years, and President-elect Trump was broadly critical of the ACA, especially in his campaign’s closing month.

Block grants are more challenging to state governments: if health care inflation runs higher than the block grant agreed-upon inflation factor, then states will either have to appropriate more state dollars to support their respective Medicaid programs or cut their programs.

That said, an outright repeal of the ACA is unlikely. Already, Mr. Trump, in an interview with the Wall Street Journal, signaled that parts of the law were “good”, highlighting the abolition of pre-existing condition exclusions and parents’ ability to keep children on family policies up to age 26. Therefore, legislative action will likely focus on the Exchange marketplace and its associated subsidies to purchase private health insurance. Exchange marketplace reform will center on tax credits, individual and employer mandates, guaranteed issue underwriting, modified community rating, among other matters.

Medicaid reform poses a more interesting dynamic. With Republicans controlling the federal government’s executive and legislative branches, along with 34 governorships and 2/3 of state legislatures, consensus to reform the Medicaid program could emerge. In brief, the next two years promise to frame up a debate that will be less about political party affiliation and more about federal and state government perspectives and each’s fiduciary responsibilities. It’s all about the funding.

Possible shift: entitlement-based program to block grants

Republican Medicaid reform plans focus on “block grants” from the federal government to the states. Under this construct, federal funding for Medicaid would shift from an entitlement program based on eligible individuals and benefits to a defined pool of money turned over to the states based on population growth and an agreed-upon inflation factor. In exchange, states would have greater flexibility to run their Medicaid programs – an unequivocally attractive option for the federal government as block granting provides future financial certainty. Conversely, block grants are more challenging to state governments: if health care inflation runs higher than the block grant agreed-upon inflation factor, then states will either have to appropriate more state dollars to support their respective Medicaid programs or cut their programs (recipients, benefits, insurer/provider rates, or a combination of all three).

None of us can foresee the future, but there is no reason to believe that the election of 2016 is either overtly positive or negative for managed behavioral health. The most likely outcome is incremental change to our business. History tells us that health care programs and financing typically evolve, as they did under the ACA. As such, Beacon will keep our focus on becoming a better company for the consumers, providers and customers that we serve.

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2 Comments. Leave new

Great post. I wonder if there will be a push for Medicare to start covering SUD treatment any time soon under a Republican administration.

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Robert Feyerharm
November 29, 2016 8:26 pm

“For example, it is likely we will see changes to the Exchange marketplace and to the Medicaid program. Whatever those changes might be, Exchange membership represents a very small part of Beacon’s revenue, and similar to other health insurers, this membership has not been a profitable business for our company since inception. We will monitor changes to the Exchange marketplace to assess whether this is viable business for us in the future.”

Perhaps not profitable, but we’re helping a lot of formerly uninsured folks access behavioral health care – surely that counts for something.

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