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Medicaid Expansion Plans Provide Novel Approaches for Healthcare Coverage

Stanton R. Mehr and Mary K. Caffrey
Published Online: Monday, December 23, 2013
Pennsylvania Governor Tom Corbett

Pennsylvania Governor
Tom Corbett

The US Supreme Court’s decision to uphold the Affordable Care Act but allow states to decide whether to expand Medicaid1 has raised a question in many states: Where political leaders have been opposed or split on President Obama’s healthcare reforms, is it smart or foolish to cover more people?

While Republicans oppose healthcare reform more often than Democrats, having a Republican in the state house has not always doomed Medicaid expansion. Arizona Governor Jan Brewer, who famously wagged her finger at Obama on an airport tarmac, nonetheless stared down legislators in her own party until they added 300,000 people to the rolls. For New Jersey’s Chris Christie, having a Democratic legislature made Medicaid expansion easier. However, neither Arizona nor New Jersey set up a state-run exchange to enroll people in health plans.

But in other states, philosophical opposition to expanding a government program and concerns about long-term costs forced full-blown rejection of Medicaid Expansion or, in the case of places like Arkansas, Iowa, and Pennsylvania, attempts at hybrid plans. Waivers would allow states to craft their own versions of Medicaid, most with elements of privatization and one, in Pennsylvania, that would require, for the first time, that most new recipients look for work.

Arkansas Opens the Door

On Friday, September 27, Arkansas Governor Mike Beebe received a phone call from US Health and Human Services Secretary Kathleen Sebelius that his state would be the first granted a waiver to pursue a so-called “private option,” which will allow state residents to use Medicaid dollars to subsidize coverage obtained through private insurance. Up to six states may pursue some form of Arkansas’ plan with two, Iowa and Pennsylvania, filing waiver requests.

Beebe, a Democrat, said the waiver would allow about 218,000 Arkansans to receive private coverage. “Our actions have drawn positive attention from across the country, and now we will focus on getting this insurance to the Arkansans who need it to lead healthier, more productive lives,” he said in a statement.2

The Arkansas, Iowa, and Pennsylvania plans all feature free-market aspects to the expansion of coverage—a unique “hybrid” strategy palatable to Republican or conservative Democratic legislators in their own states, and perhaps to conservative lawmakers elsewhere who have resisted expanding any government program.3 Indeed, at the recent Medicare-Medicaid conference sponsored by America’s Health Insurance Plans, Daniel Crippen, executive director of the National Governors Association, said absent the willingness of the Centers for Medicare & Medicaid Services (CMS) to approve hybrid plans, he did not foresee additional Medicaid expansion until after the 2016 election cycle. “If there’s more flexibility, the sooner the expansion will occur,” he said.

Table. Key Provisions of the Arkansas, Iowa, and Pennsylvania Waiver Applications

Plan Element Arkansas Iowa Pennsylvania
Use of Private Health Plans for Newly Eligible? Mandatory Mandatory Mandatory
Use of Premium Assistance Yes Yes Yes
Plan Duration 2014-2016 2014-2018 2014-a
Estimated Newly Eligible Population 225,000 150,000 620,000
Enrollment in Private Plans Yes Yes Yes
Proposed Coverage Groups All newly eligible benificiaries up to 138% of FPL All new eligible beneficiaries between 101% and 138% FPL All newly eligible beneficiaries up to 138%of FOPL
Exempted Groups Frail, dual eligibles Frail, dual eligibles Frail, dual eligibles
Premium Contributions None $20 per month None
Copays Same as existing state law for those at 100%-138% of FPL; waived for others Limited to nonemergency use of ED services (starting year 2) Up to $25 per monthb
Wraparound Benefits Yes, paid by Medicaid No Yes
Other Features Auto-assignment for beneficiaries who do not choose from at least 2 “Silver” level Marketplace plans Financial penalties for low adherence to medical regimen and regular check-ups Beneficiary work status to be reviewed to determine eligibility

ED indicates emergency department; FPL, federal poverty level.
aPennsylvania will evaluate the program within 2 years to determine if savings outpace its costs. If it is found to cost the state more, it will discontinue the program.
bBased on a sliding scale; premiums can be waived based on beneficiary participation in health improvement activities.

Sources:

  • Musumeci M. Medicaid expansion through premium assistance: key issues for beneficiaries in Arkansas’ section 1115 demonstration waiver proposal: issue brief. Kaiser Commission on Medicaid and the Uninsured. July 2013. http:// kff.org/medicaid/issue-brief/medicaid-expansion-through-premium-assistance-key-issues-for-beneficiaries-in-arkansassection- 1115-demonstration-waiver-proposal/). Accessed September 20, 2013.
  • Musumeci M. Medicaid expansion through premium assistance: Arkansas and Iowa’s Section 1115 Demonstration Waiver applications compared. Kaiser Commission on Medicaid and the Uninsured. http://kff.org/health-reform/fact-sheet/ medicaid-expansion-through-premium-assistance-arkansas-and-iowas-section-1115-demonstration-waiver-applicationscompared/. Published September 18, 2013. Accessed September 20, 2013.
  • Henderson OK. Branstad signs Iowa’s response to Medicaid expansion. Radio Iowa, June 20, 2013. www.radioiowa. com/2013/06/20/branstad-signs-iowas-response-to-medicaid-expansion-audio/. Accessed September 20, 2013.
  • Worden A. Corbett plan: accept Medicaid funding, add requirements. Philadelphia Inquirer September 17, 2013. www.philly.com/philly/news/20130917_Corbett_plan__Accept_Medicaid_funding__add_requirements. html#ZH21WehqGdFJTyg2.99. Accessed September 25, 2013.
  • Worden A, Couloumbis A, Brubaker H. Gov. Corbett to propose big changes to Pennsylvania Medicaid. Kaiser Health News, September 15, 2013. www.kaiserhealthnews.org/Stories/2013/September/15/Pennsylvania-Medicaid-Gov-Tom- Corbett.aspx. Accessed September 20, 2013.
  • Healthy Pennsylvania: Reforming Medicaid. Pennsylvania Department of Public Welfare. www.dpw.state.pa.us/ucmprd/ groups/webcontent/documents/document/p_035843.pdf. Accessed September 25, 2013.

 

Lack of expansion translates directly into lack of coverage. In June, researchers estimated that if 14 states opted out of Medicaid expansion, as allowed by the 2012 Supreme Court ruling, 3.6 million fewer people would be insured than if all of the states participated. These states would lose out on $8.4 billion in federal transfer payments. Furthermore, uncompensated care could cost these states another $1 billion by 2016.4 In most instances, the states’ healthcare industries have been arguing loudly in favor of Medicaid expansion, based on the forecasts for greater revenues resulting from larger populations having coverage and seeking care. This has been putting state governments at odds with major local and regional businesses in largely Republican areas, an uncomfortable position for businessfriendly elected officials.

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