States Work to Smooth Transition from Medicaid to Health Exchanges
When income changes move millions of Americans from public to private insurance next year, states want to make the switch simple.
In theory, the Affordable Care Act’s means of expanding health coverage are pretty simple. If your income is below 138 percent of the federal poverty (about $15,850 for an individual) in 2014, you’ll be enrolled in Medicaid. If your income is above that threshold, up to 400 percent of the poverty line, you’ll receive federal tax subsidies next year to buy private coverage on the insurance marketplaces created by the law. Nice and tidy.
But in practice, it’s not so clean. In real life, a person’s income can fluctuate all the time, every month, even every week. That’s especially true of low-income Americans. So you could have people constantly moving from Medicaid to subsidized insurance and back again: as many as 28 million could switch at least once by the end of next year, according to a 2011 Health Affairs report. That could lead to a lot of disruptions because having new insurance means people might not be able to see the same doctors, might not know the details of their new plan, etc. It’s called “churning” in the world of health policy wonks.
So how are states going to make sure that moving from Medicaid to the marketplaces or vice versa is as smooth as possible for their residents? Well, they’re starting to get creative.
Nevada might be taking the most novel approach. Here’s what they’re doing: the state already contracts with private companies, called managed care organizations, to coordinate care for their Medicaid beneficiaries. Those contracts expire periodically, so when they do, the state is attaching a requirement before the contracts will be renewed. The companies have to offer a comparable private plan on the health insurance marketplace starting next year. The state has received three applications that comply with that new condition, according to the state purchasing department, and more are expected as older contracts expire.
So if a Medicaid enrollee in Nevada gets a pay raise or a new job and moves into the tax subsidy category, as roughly 27,000 are expected to do in 2014, they’ll be able to buy a plan on the marketplace with the same care network that they had while enrolled in Medicaid. The cost-sharing won’t be exactly the same -- generally speaking, they’ll have to pay more of their own bills with a private plan -- but they’ll still be able to visit the same doctors who already know their medical history.
“Continuity of care was the goal on that one,” says C.J. Bawden, spokesman for the Silver State Health Insurance Exchange, which coordinated the plan with Nevada’s Medicaid office. “We were focused on making sure that people would have the same providers in either market.”
Managed care is a popular model for Medicaid, available in more than two-thirds of the state, so it’s possible that others will follow in Nevada’s footsteps. California, for example, has included an exemption in its request for health plans to be sold on the marketplace for Medicaid managed-care plans, presumably to make it easier for those plans to get into the market.
"This is one of the best, cost-efficient ways for states to deal with this issue of churn," says Jenna Stento, who tracks state implementation of the ACA at Avalere Health, a consulting firm. "Not all states have such robust managed care. They don't have the infrastructure. But for those that do, this is a good way to do it."
But states also have other options to address the same issue in different ways.
One of the most interesting is called “premium assistance.” Basically, the state Medicaid program helps individuals pay for private coverage in the individual market, which would mostly be housed on the ACA’s marketplaces starting next year. The idea is to lighten the load of private insurance, which is usually more expensive than Medicaid, and to ensure that recipients receive coverage that is as comprehensive as what they would receive through Medicaid.
It’s a decidedly obscure option, even in the realm of policy wonks. According to a 2010 Government Accountability Office report, only six states were offering it, and the number of beneficiaries is projected to be very low. But it could be another way to get at the churning problem. If somebody’s income goes above 138 percent of the poverty line and they move to subsidized coverage on the marketplace, the premium assistance could offset some of the new costs for the individuals and make sure that their coverage doesn’t fall off in the private market.
“This is obviously a whole new world. It’s reasonable for states to be exploring all of these options,” says Joan Alker, co-executive director at Georgetown University’s Center for Children and Families, who covered the premium assistance options under the ACA in a recent blog post. She expects some states will at least take it under consideration.
Alker points out that the idea could be appealing to Republican-led states that might want to funnel more people to private insurance. “It has some ideological attractiveness,” she says. “A recurring theme in conservative health policy is giving folks a voucher and using it to buy private coverage.”
Arguably the best hope for combating churning is the Basic Health Plan option created by the ACA. The law allows states to create a state-run health plan that replaces the Medicaid expansion and some of the marketplace population by covering everyone up to 200 percent of the federal poverty level. People above that line would still buy insurance on the marketplaces.
A 2012 Health Affairs report estimated that Basic Health Plans would significantly reduce churning by offering a single route to coverage for low-income Americans. The reason being, the higher up the income scale you go, the more stability there is; people at 200 percent of the poverty line are less likely to be moving back and forth than people at 138 percent.
Five states have already tested an early version of the program. But full-scale implementation will have to wait: as Kaiser Health News reported, the Obama administration decided earlier this month to postpone the rollout of Basic Health Plans until 2015.
The market could be limited to a few ambitious states, Avalere's Stento speculates. States might find running a whole new health plan, separate from their Medicaid program, to be too much of an administrative burden.
"I would suspect that most states will end up mitigating churn through Medicaid and the exchanges, and a minority of states will try Basic Health Plans," she says. "I don't suspect this will be a widespread program come 2015."