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The Billion Dollar Hard Sell: Obamacare's Slow Start in Indian Country

The Affordable Care Act—Obamacare—remains a hard sell in Indian country.

The first comprehensive report from government data show that key measures, such as the purchase of insurance, reflect only about 3 percent of eligible American Indians and Alaska Natives buying from a marketplace exchange. The result is that more than a billion dollars in tax credits—as well as additional tens of millions of increased funding for the Indian health system—is left behind and unclaimed.

And nearly a million American Indians and Alaska Natives remain uninsured during the first year of this new law.

Still, the Affordable Care Act has the potential to radically shift the funding mechanisms for the Indian health system. The way the law is supposed to work is to give American Indian and Alaska Natives additional insurance options. This is critical because under current law, Congress appropriates $4.4 billion for Indian health and that amount is not nearly enough to fund the Indian health system. But the Affordable Care Act promotes new revenue, money from private insurance, Medicaid, Medicare and other payers, that's currently budgeted at $810 million. But even that total, $5.2 billion, is not nearly enough. The Indian Health Service estimates that its per person spending under this formula is $2,849 compared to $7,713 per person spending for the U.S. population.

Mark Trahant

So the idea is that third-party billing from insurance will eventually eliminate the funding gap. If enough people from Indian country get insurance from all sources, there is the potential for a fully funded health system. Ideally, every patient would be educated about their insurance options (often at no cost) while they are are at a health facility.

But a fully funded health system remains a far off promise.

The Affordable Care Act has had many problems in its first form. The web site did not work and there is much confusion about the available options for American Indians and Alaska Natives. Indeed, much of the early marketing for the Affordable Care Act was to educate Native Americans about the exemption from the insurance mandate instead of explaining why insurance could improve funding for the entire Indian health system.

RELATED: The Affordable Care Act Ought to Be Transparent; What’s Working?

The Affordable Care Act sets out to increase funding for Indian health programs in three ways: Expand Medicaid eligibility; help people purchase insurance (called Qualified Health Plans) on their own; and add new insurance requirements for employers.

“IHS has estimated that the greatest impact for our patients is likely to be the Medicaid expansion and we estimate much greater potential for third party collections through Medicaid enrollment,” according to Raho Ortiz, IHS’ director of the business office enhancement. “In the FY 2014 President's Budget Request, IHS estimated collections from private insurance due to the Affordable Care Act to increase by $5 million, and collections due to the Medicaid expansion to increase by $95 million if all states adopted the expansion.”

That’s where the political debate about the Affordable Care Act is impacting the budget because so many states have opted out for political reasons. Alaska, Oklahoma, Montana and South Dakota are among the states that rejected the Medicaid expansion. Of the nearly one million uninsured American Indians and Alaska Natives, more than 460,000 live in states without Medicaid expansion. Thus, Ortiz said, the “estimates for Medicaid collections would be lower.”

Next year’s IHS budget estimates that collections from private insurance may not change, but the potential increase from Medicaid collections is $22 million. “Many of our patients are finding when they enroll in the marketplace that they are newly eligible for Medicaid in those states that have implemented the Medicaid expansion and therefore do not need to purchase insurance,” he wrote in an email.

Ed Fox, director of Health Services for the Port Gamble S’Klallam Tribe of Washington, compiled national data for his website, Health Care Reform for American Indians and Alaska Natives.

Fox writes that in Washington state, the expansion of eligibility for Medicaid has already adding significant new sources to native health programs. The state’s Medicaid program, Apple Health, is now as large a source of funding as the Indian Health Service.

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He estimates that Washington is “half way home” to enrolling uninsured American Indians and Alaska Natives through Medicaid, roughly 10,000 out of the 20,000 who should be eligible. (Fox says there may be even more people who have treaty-based income and therefore could qualify under Medicaid limits.) At the Port Gamble S'Klallam Health Clinic, the increased insurance coverage has resulted in a 56 percent increase in revenues as well as a 46 decrease in write-offs because of uninsured health care.

But Washington is a state with Medicaid expansion. The flip side of that revenue increase is the demand for health services in states with tighter Medicaid rules and where the Indian health system must rely on IHS appropriations from Congress.

IHS budgets are built from a recurring base. So local unit funds from the previous year become the base for funding during the next cycle. The law is designed to reward local health care agencies, whether tribal or IHS, for increased third-party billing. So, as the IHS’ spokesperson, Ortiz points out, “The burden on tribal communities is greatest when the state does not expand Medicaid since that means potential third party collections from enrollment of newly eligible individuals that can help to expand services at the local levels are not realized.”

In other words: There will be significant less money to deliver Indian health care in states that deny Medicaid expansion.

That’s why the private insurance option is important in states without Medicaid expansion. But that means individual American Indian and Alaska Natives must take the step to sign up for insurance. Unlike Medicaid, the purchase of insurance through a marketplace exchange is based on national criteria and most American Indians and Alaska Natives qualify for a subsidy. But the person has to apply; it’s not automatic. Nationwide less than 15,000 American Indians and Alaska Natives have joined Qualified Health Plans. (IHS does add that there is not yet a complete set of reliable data. The agency said that the recent report leaves out a significant portion of IHS eligible patients that reside in states served by state-based marketplaces.)

In Montana, state officials and representatives from the IHS area office in Billings have been on a mission to educate tribal members about the Affordable Care Act.

“We’re at a whole new place trying to teach people about insurance,” says Lesa Evers, tribal relations manager for the Montana Department of Health and Human Services. She says the very idea of insurance is a new conversation. There are some 17,000 American Indians and Alaska Natives in Montana that are uninsured—and as of April 19, 521 people (or 3 percent) have signed up through the exchange.

Evers sees 521 signups as a good number because it represents a successful early effort. She’s been on the road a great deal since January and been talking with native people who have many questions about the law. “I’d rather have 521 people who have thought about this, rather than getting sign ups from people who would drop off later,” she says. Every one of these newly insured people will then tell others about what it's like, eventually expanding the insurance network.

One state thriving is North Carolina 1,565 where ten percent of the eligible Native Americans have signed up for marketplace insurance. Laura Bird, who is working on health issues for the National Congress of American Indians, says this is “a good start but we still have work to do on increasing enrollment across Indian country. Given the special monthly enrollment period for enrolled members of federally recognized tribes and ANCSA Corporations, we still have an opportunity to increase enrollment in 2014.”

“It seems to me that the states with the highest numbers started early in their outreach and education efforts,” Bird says.

She said a lot of the questions now are being raised about the role of tribes as employers. Many people in Indian country, like the general population, get insurance through work—and that includes tribal governments or enterprises. Next year the Affordable Care Act mandates large employers, including tribal employers, with 50 or more full-time employees (average 30 hours per week) to offer coverage to employees and their dependents.

So what’s next for the Affordable Care Act?

“Against a lot of evidence to the contrary, I remain optimistic that we will figure out the Qualified Health Plan side of the ACA equation,” says Ed Fox. “But it certainly has more moving parts than Medicaid Expansion — as we all knew.” He says there remain a lot of questions about the insurance mix for clinics, ranging from sponsored plans (where tribes purchase the insurance plan) to whether more people will buy into the Qualified Health Plans.

The Affordable Care Act demands a shift in the business model for the Indian health system. And that means more of the funding will have to come from insurance (either government or private) instead of annual appropriations. But to make that idea work -- and to fully fund the health care delivery system -- there will have to be action from tribes, Alaska Native corporations, and hundreds of thousands of individuals.

Mark Trahant is the Atwood Chair of Journalism at the University of Alaska Anchorage. He is a member of the Shoshone-Bannock Tribes and a former media fellow for the Kaiser Family Foundation.