5 Things Texas: Molina & Centene, Special session, Marjorie Petty

I think we’re all suffering from a little bit of whiplash following events in DC the last few weeks. Luckily, health policy in Austin seems to be moving a little slower, at least in the House.

From the special session to the individual market, here’s what we’re watching for Texas in August.

DJ 5 Things Signature





1.  Repercussions for Texas of failed reform

July ended with the Senate failing to move forward on health care. Two key Mitch McConnell quotes: “It’s time to move on” and “bailing out insurance companies with no thought of any kind of reform is not something I want to be part of.” So as Congress moves to tax reform, we’re keeping an eye on the $10 billion CSR payment for 2018, which is still is limbo along with the remaining payments for this year.

Interestingly, both Texas senators made Axios’ “stronger and weaker” list following the Senate vote. Senator Cruz is stronger due to his presence at the negotiating table despite his past all-or-nothing approach. Senator Cornyn makes the weaker list. According to a former Senate Republican staffer: “Everyone in health care knows nothing he said was right. He was always projecting what leadership wanted to happen, not what was actually happening. He was always wrong.”

2.  Navigating the individual market

Two Texas carriers ended the second quarter very differently. Ahead of its financial earnings conference call, Molina Healthcare announced it was cutting 1,400 positions in response to losses related to the individual market. Molina offers plans in nine Texas counties, but the loss of 10% of its workforce might cause Molina to reevaluate 2018 plans and rates in Texas. Molina reported a $230 million net loss for the quarter, compared to a net income of $33 million in Q2 of 2016. In Texas, Molina had an increase of $66 million in total premium revenue compared to 2016 Q2.

Centene Corporation, owner of Superior HealthPlan, reported higher than projected profits for Q2. Total revenue grew 10% for the quarter, up to nearly $12 billion. And as carriers withdraw from the individual market, Centene plans to expand to three new states (Kansas, Missouri, Nevada) and increase its presence in existing markets.

3.  Update on special session

It’s week three of the special session so here’s a quick run down of the health care related bills on Gov. Abbott’s wish list. Four maternal mortality bills were on the House calendar for Monday, but HB9, which passed out of the House with 144 yes votes, is the one Gov. Abbott is watching. DNR order reform bill SB11 passed out of the Senate 21-10 but the House has scheduled a hearing on its own version.

The Senate also passed a bill that would prevent government funding for health care providers that also provide abortion services (21-10), and a bill that would expand reporting requirements for complications resulting from abortion procedures (22-9).

Don’t expect quick movement on any of these in the House. While the Senate has passed 20 bills on 18 items on Gov. Abbott’s agenda, the House has passed eight bills related to four items. While the Governor and Lt. Governor are fighting to see who is more socially conservative, House Speaker Joe Straus appears focused on fiscal issues and smaller government. These appear to be in some tension with one another.

4.  Video: Marjorie Petty, formerly of HHS

Marjorie Petty is the former Department of Health & Human Services Regional Director for Region VI. As regional director, she oversaw Arkansas, Louisiana, New Mexico, Oklahoma, and Texas, as well as 68 federally recognized tribes.

She joins us in this edition of “What They’re Watching” to discuss seizing local opportunity. While her comments are specifically on workforce reform, I think they could easily be applied to efforts in all silos of health care: “We need to take the opportunity to redesign the system at the community level,” says Petty.

5.  Proposed DSH reductions

CMS released a proposed rule to reduce DSH payments by $43 billion from FY 2018 to FY 2025. These reductions were originally scheduled to begin in FY 2014 as part of the ACA, but were delayed three times.

The rule doesn’t include actual funding levels for FY 2018, but includes estimated levels for FY 2017. Due to its higher uninsured rate (16 percent in 2015), Texas is classified as a non-low DSH state, meaning it historically has received higher DSH allotments relative to its total Medicaid expenditures and will have a higher reduction in payments. In the FY 2017 estimate, Texas has a 14.1% reduction of roughly $148 million, lowering total state DSH funding to almost $902 million. Texas’ reduction is lower than the total non-low DSH state reduction of 17.24% but will still impact the state’s ability to maintain current DSH funding levels.