- October 24, 2014
- By Christine Vestal
Less than a
year after low-income Arkansans started receiving health coverage under the
Affordable Care Act’s controversial Medicaid expansion, the state is declaring
its so-called “private option” experiment a success.
Hospitals saw
fewer uninsured patients, state coffers were spared millions in health care
costs and private insurers reported record-low premium hikes. Most important,
Arkansas’ uninsured rate fell from 23 percent to 12 percent, the sharpest drop
in the country.
But lawmakers
in Arkansas, where Gov. Mike Beebe is a Democrat and the legislature is
controlled by Republicans, have already asked the federal government for
adjustments to their groundbreaking plan, under which Arkansans used Medicaid
dollars to purchase private health insurance on the insurance exchange created
under the ACA. Meanwhile, other states are customizing their own alternative
approaches to expanding Medicaid to cover adults with incomes up to 138 percent
of the federal poverty level ($16,105 for an individual).
“It’s an iterative
process,” said Matt Salo, director of the National Association of Medicaid
Directors. “States are probing the defenses of the HHS (U.S. Department of
Health and Human Services) fortress to see what they can get approved,” he
said.
Ever since the
U.S. Supreme Court made the federal health law’s Medicaid expansion optional
for states, the debate over expansion has become a proxy for supporting or
opposing Obamacare.
After the
November elections, more states are expected to reconsider their largely
political decisions to pass up millions in federal dollars that can be used to
improve the health of their residents.
“This is a fight
within the Republican party,” said Joan Alker, director of Georgetown
University’s Center for Children and Families. “After the election, when
governors and lawmakers feel less threatened, we should see more movement,” she
said. Alker and others cite Idaho, Montana, Nebraska and Florida as possible
converts.
So far, 28
states and the District of Columbia have decided to expand Medicaid and 22 have
not. Of the 28 states that have expanded the federal-state program, 19
have Democratic governors and nine – Indiana, Iowa, Michigan, Nevada, New
Jersey, New Mexico, North Dakota, Ohio and Pennsylvania – are led by
Republicans.
Six states have
asked HHS for special permission to put their own stamp on the way
beneficiaries receive and pay for care, instead of simply adding them to the
rolls of traditional Medicaid. Arkansas was first to get approval in 2013 for
its private option, which this year allowed 210,000 Arkansans to use Medicaid
dollars to purchase private health insurance on the state’s insurance exchange.
Iowa was next,
receiving permission to substitute private insurance for Medicaid for a portion
of its newly eligible adults, charge copays and eliminate nonemergency
transportation; Pennsylvania got approval in July to take a similar approach
with enrollment starting next month. Michigan chose not to switch to private
insurance, but got federal approval to charge newly eligible Medicaid
beneficiaries copays that can be reduced as a reward for engaging in healthy
behaviors. New Hampshire and Indiana are next in the queue.
Utah is among a
handful of states actively considering an alternative Medicaid expansion, and
Republican Gov. Gary Herbert is expected to be the next to announce a plan. He
will then have to ask approval from state lawmakers and the federal government.
Tennessee and Wyoming, both led by Republican governors, are also considering
alternatives to traditional Medicaid expansion.
A GOP Debate
The debate
within the remaining nonexpansion states is largely between conservative
Republicans, who oppose Medicaid expansion in any form, and moderate
Republicans, who are open to alternative ways to use federal money to cover
more people. The Obama administration is so eager for more states to expand
Medicaid that it is offering significant flexibility in the way states
implement the health law’s historic expansion of the nearly 50-year-old
Medicaid program.
At stake is
$424 billion in federal money through 2022 to cover 6.7 million uninsured
adults, according to a new study by the Urban Institute and the Robert Wood
Johnson Foundation. The Kaiser Family Foundation estimates that nearly 5 million of them are
ineligible to receive federal tax credits on the insurance exchanges because
their incomes are below the federal poverty level ($11,670 for an individual).
For states that
choose to expand Medicaid – no matter what approach they take – the federal
government will cover the entire cost of coverage in 2014, 2015 and 2016. After
that, full federal coverage declines each year, tapering to 90 percent in 2020
and beyond.
Given the
administration’s flexibility, all new expansions are expected to include some
type of customization. So far, states are seeking permission to charge
copayments to cover part of the cost of visiting a doctor’s office or hospital emergency
department. Other common requests include policies that reward consumers for
adopting healthy lifestyles and “health savings accounts” designed to encourage
consumers to sock away money for future health expenditures.
Most of the
requests reflect decades-old Republican principles that low-income Medicaid
beneficiaries should take personal responsibility for their health by making
healthy lifestyle choices and more economical decisions about their care.
In addition,
most states are seeking to bring Medicaid benefits in line with the benefits
received by middle-class people who pay for private insurance. For example,
most states are asking to eliminate special services such as nonemergency
transportation and regular diagnostic screenings for 19- and 20-year-olds,
which are covered under traditional Medicaid.
Alker and other
consumer advocates are hopeful that more states will choose expansion, but they
are closely watching states’ negotiations with the federal government. The
worry is that too much administrative complexity combined with even minimal
copays could result in lower sign-ups and less use of the health care system.
For example,
copays may make sense in the private insurance market, Alker said, but research
shows the introduction of even nominal fees in the Medicaid program in the past
has resulted in some low-income consumers missing needed care.
As for
nonemergency transportation, studies show that their most common use is for
kidney dialysis and behavioral health therapy, both of which are considered
essential services. Consumer advocates argue that eliminating rides to
important medical appointments could increase overall costs in the long run.
Good for the Market
One of the
biggest benefits of Arkansas’ private option has been its effect on the
commercial health insurance market, said Robin Arnold-Williams, senior health
care adviser with health care consultants Leavitt Partners. Early estimates
indicate next year’s insurance rates in the state will be an average of 2
percent lower than this year, and the statewide insurance market now includes
five carriers, compared to just one statewide carrier in the past.
Under the
Arkansas plan, residents with incomes up to 138 percent of poverty were allowed
to sign up for private health insurance on the exchange starting in October
2013. But in approving its proposal, the federal government required the state
to exclude anyone who self-attested to being in poor health or “medically
frail.” About 10 percent did so. As a result, the sickest and costliest
patients were served under traditional Medicaid.
Furthermore, as
a group, the people using Medicaid dollars to purchase insurance on the
exchange were younger and healthier than other exchange customers, and they
made up 75 percent of the total. In a small state with scant insurance
competition, adding that low-cost population to the exchange pool might have
rescued the state’s fledgling exchange from a “death spiral,” Williams
said.
The private
option also was expected to improve patients’ access to health care providers,
because doctors in private networks are paid higher fees than those who bill
Medicaid, and to reduce administrative difficulties for consumers whose rising
incomes force them to switch from Medicaid to private insurance, by allowing
them to maintain their health cards and doctors. In the coming months, Arkansas
Medicaid officials will report on whether those hopes came to fruition.
http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/10/24/beyond-the-private-option-for-medicaid-expansion
