March 26, 2013 - Since the Supreme Court made the Medicaid
expansion under the federal health law optional last year,
states’ decisions have
largely split along party lines. States run by Democrats have
been opting in; states run by Republicans have mostly been saying no or
holding back.
But now Arkansas – at the suggestion of the federal
government – has suggested a third
option: Enroll those newly eligible for Medicaid in the same
private insurance plans available to individuals and small businesses.
And some think that could shake things up. A lot.
The Arkansas proposal was crafted as much out of
political necessity as from substantive desire, says Andy Allison, the
state’s Medicaid director.
“I think this is likely to be the only way that
expansion or coverage for this population could occur,” he says.
There are two reasons for that. One is that the
state has a Democratic governor (Mike Beebe, now serving his second
term), but a heavily Republican state legislature, which has not
looked favorably on expanding Medicaid.
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A second reason is that few adults currently
qualify for Medicaid in Arkansas. And those who do have to be really
poor, says Allison: “We cover just at 17 percent of the poverty level
for those who are parents and we don’t cover childless adults unless
they have a disability.”
For the record, 17 percent of poverty is less than
$2,000 a year. Expanding Medicaid under the Affordable Care Act to 133
percent of poverty — about $15,000 — could potentially add as many as
250,000 Arkansans to the rolls.
But what was a political nonstarter gained new life
when someone suggested the idea of enrolling those new people in the
same private plans individuals and small businesses will be purchasing —
the new
marketplaces, called exchanges.
So far the state has gotten a tentative
go-ahead from the U.S. Department of Health and Human
Services. That’s caught the attention of several other Republican-run
states that had been holding out on the Medicaid expansion, including
Ohio, Florida, and even Texas.
But experts insist the proposal is hardly as new as
some have suggested.
“The authority to use Medicaid funds to buy
insurance has been in the law since it was first enacted,” said Sara
Rosenbaum, a law professor and Medicaid expert at the George
Washington University.
Still, when the Arkansas arrangement first went
public about a month ago, there was some immediate hand-wringing about
its potential cost.
“We have to … recognize that it will cost more,”
said Austin
Frakt, a Boston University health economist. “You don’t get
something for nothing.”
But Frakt concedes that paying somewhat more — how
much more remains a subject of contention — might not be all bad.
“One of the basic critiques of the Medicaid program
is they pay providers too little and that’s why too few of them
participate,” he said.
So putting people in private plans with higher
provider payments could help address those access problems.
Meanwhile, Medicaid watchers say proposals like the
one in Arkansas could solve other problems — for the new Medicaid
recipients and for the others who will be buying coverage in the new
exchanges.
One potential problem the private plans could
address is called churning.
It happens when a person’s income is near the threshold between
qualifying for Medicaid and qualifying for federal
help to buy private coverage.
Imagine, says Rosenbaum, someone working 30 hours a
week in the summer, whose hours are cut back so they qualify for
Medicaid part of the year, then expanded, pushing them back out of the
program.
“And you get a letter saying, ‘Now you’re earning
more money, so now you have to leave your plan. You and your kids have
to leave your doctors; you have to pick a new plan.’ And then in winter,
if your hours drop back down, you get another letter saying, ‘Oh, sorry,
you have to leave your plan, [and] your doctors,’ ” she says. “Those
people could be forced to change plans multiple times a year.”
Rosenbaum says enrolling Medicaid beneficiaries in
plans in the exchange instead could protect as many as 28 million people
a year from churning if their income does get too high.
“Your plan will stay your plan, your doctors will
stay your doctors,” she said. Basically the “bank of Medicaid” and the
“bank of the exchange” will have a conversation with each other about
who pays the bills. And your premium may be a little bit different and
your co-pays may be a little bit different, but your healthcare won’t be
interrupted.”
And it’s not just those on Medicaid who could
benefit.
Many of the new Medicaid enrollees will be
relatively healthy, relatively young people with relatively low
insurance costs. They could help bring premiums down for those in the
exchanges who are older and sicker.
“It’s the woman who’s 32 working at Wal-Mart with a
couple of kids who we really need in the exchange,” Rosenbaum says. “And
so if we buy her in and keep her in, it’s going to be that much better
off for the 55-year-old woman who is sick and unable to work and needs
coverage through the exchange because of a lot of health conditions. ”
Still, one of the fundamental appeals of putting
new Medicaid enrollees in private plans remains political.
“I think in states where the resistance to the
Medicaid expansion was based primarily on ‘This is a big government
program that we can’t make any bigger,’ finding a way to do the
expansion through private coverage will open a door to a conversation
that was otherwise not taking place,” said Alan Weil of the National
Academy for State Health Policy.
What remains a key issue for many states, however,
is that the federal government hasn’t yet said exactly how much states
can spend on the private plans — only that what they spend to enroll
Medicaid beneficiaries in the plans should be “comparable” to what they
would have spent otherwise.
Health and Human Services Secretary Kathleen
Sebelius says officials will spell out more details on that issue “in
the very near future.”
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