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HHS told Obamacare workers their budget was safe — then slashed it 40 percent

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Late Thursday afternoon, the Trump administration announced it would slash Obamacare's enrollment budget. Advertising spending will fall by 90 percent and grants for in-person assistance will drop 41 percent.

The people who do that in-person assistance? They were completely blindsided by the news. Most of them learned about it from news stories. (One navigator told me she found out when a reporter called to ask for comment on the budget cuts.)

I've spent the past day talking to navigators across the country about the budget cuts and what it will mean for their work. And I wanted to use today's VoxCare to tell you about the things they said that were most interesting to me.

1) Most had been reassured by Health and Human Services officials that their 2018 funding would not be cut — making yesterday a total surprise.

Navigator groups that run Obamacare's in-person assistance arm have understandably been concerned about what their funding would look like under the Trump administration.

Multiple navigators told me that they'd asked their contacts at Health and Human Services about this question, and were told not to worry. Now they're not sure whether HHS officials misled them — or simply didn't know what was coming down the pike.

"I don’t know if she had a good poker face or what was going on," says Kelly Allen, who works as a navigator in West Virginia, of her group's communications with the federal government.

"My project officer never let on about any reduction in funding," says Randal Serr, who runs Take Care Utah. "We talked to a supervisor and she assured us and reassured us that the funding would come through. She never mentioned this."

This means that a lot of navigator groups have been making plans for the 2018 open enrollment period, which begins on November 1, assuming they would have their full budget. Allen said her organization was buying ads for this fall and scoping out office space.

Now they're not sure if they can afford those plans anymore.

“We’ve been moving forward as if nothing was going to change because we didn’t have much of another option,” says Serr. “I see us either having to reduce staff or leverage new funding. It’s a strange time.”

2) The Obama administration had encouraged navigators to set high enrollment goals. Now navigators feel like that backfired.

The Obama administration had given the navigator program between $60 and $67 million annually over past four years. The Trump administration will provide $36 million next year, a 41 percent cut.

Trump officials explained that they will use “enrollment targets” that each navigator group set for themselves to distribute the funding cuts. A navigator group that only signed up 40 percent of its enrollment target, for example, will only receive 40 percent of last year’s funding. This will cut the program’s funding by an estimated $23 million.

These enrollment targets are a suspicious metric to use to set budgets. For one thing, they are set by the navigators themselves. This means that a group that lowballed their estimates is rewarded, while a non-profit that set an ambitious goal gets penalized. These two groups might have done equally good work signing people up for coverage; the only difference is where they set their goals.

The Obama administration repeatedly encouraged navigator groups to set high goals, which they felt would serve as a motivator. Navigators had no idea that these numbers would become part of the funding scheme.

“CMS was telling us set high goals and even if you don’t hit those goals, we want to aim to help as many people as possible,” says Serr.

What’s more, in-person enrollments are only one part of the navigator program’s mission. Much of the group’s time is spent answering questions over the phone, attending community events to raise awareness, and helping new enrollees understand their coverage after they sign up.

The Palmetto Project in South Carolina, for example, estimates it has directly signed 1,900 people up for marketplace coverage this year — but has also answered 24,000 inquiries about health law coverage in the same time frame.

“If our legal responsibility was simply to enroll, I might cave and be a bit more sympathetic,” says Shelli Quenga, who directs the Palmetto Project. “But we have five different responsibilities, and enrolling is only one of them. Outreach and education is a huge piece. You don’t get enrollments from teaching people to use their insurance.”

3) The navigator groups still don't know their 2018 budgets.

Navigator groups did receive a bulletin from Health and Human Services last night, explaining the changes to their funding. They have not received information, however, about their specific budget cuts.

And estimating the cut on their own is tough. Groups aren't sure whether the federal government will use 2016 or 2017 enrollment data as the benchmark data. They don't know whether Medicaid sign-ups will count for anything (but the most common guess is that they won't).

Most are expecting they'll find out sometime next week, after the long holiday weekend. "We were told a letter should arrive, probably sometime after Labor Day," Seer says. "So we're probably waiting another five or six days, maybe, to find out."

Chart of the Day

awareness of health insurance marketplaces The Commonwealth Fund

Forty percent of the uninsured are unaware of health law marketplaces. The Trump administration suggested Thursday that it was cutting Obamacare advertising because public awareness is as high as its ever going to get. Data from the nonprofit Commonwealth Fund suggests otherwise: An estimated 38 percent of the uninsured are unaware of the health law marketplaces. Read more here.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

Analysis and longer reads

  • "Governors' market stabilization proposal may clash with new GOP repeal bid": “Two healthcare trains may be headed for a collision in Congress next month, as a bipartisan group of governors and three Senate Republicans push clashing visions of how to fix the Affordable Care Act. But it's unclear whether Republicans and Democrats will be able to agree on any bill—or whether President Donald Trump will sign one—before the Sept. 27 deadline for insurers to decide whether to offer individual-market plans in 2018.” —Harris Meyer, Modern Healthcare
  • "Medicaid fueling opioid epidemic? New theory is challenged": “If anything, university researchers say Medicaid seems to be doing the opposite of what conservatives allege. "Medicaid is doing its job" by increasing treatment for opioid addiction, said Temple University economist Catherine Maclean, who recently published a paper on Medicaid expansion and drug treatment. "As more time passes, we may see a decline in overdoses in expansion states relative to nonexpansion states."” —Ricardo Alonso-Zaldivar, Associated Press
  • "Lessons for the next act on health care": “When Congress comes back next week, it's going to start the next chapter on the Affordable Care Act — and it probably will set its sights a lot lower for changing the law, now that the repeal effort has collapsed. There are a lot of lessons Republicans can learn from the failure [of] that effort — and a few that Democrats can learn too, if they're honest about their own experiences since the ACA became law.” —David Nather, Axios

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