White House urges states to consider alternatives to Medicaid expansion

Arkansas model being eyed by other states

Topics: Access to Care, Quality, Performance Improvement, Appropriateness, Finance

March 25, 2013

The Obama administration is encouraging states resistant to the Affordable Care Act's Medicaid expansion to consider an alternative plan that would rely on private health insurance, the New York Times reports.

Under the plan, states could shift low-income, Medicaid-eligible residents to coverage under the ACA's insurance exchanges, even though the approach could be more costly. The model is based on Arkansas's Medicaid expansion proposal to provide private health insurance to more than 200,000 uninsured people with incomes up to 138% of the federal poverty level. The "private option" would be offered through the insurance exchange that the state will operate in partnership with the federal government.

According to the Times, Ohio is in negotiations with the administration on a similar plan to use federal Medicaid funds to pay for commercial insurance premiums that will be available to state residents through Ohio's federally run exchange. Republicans in other states—including Florida, Louisiana, Pennsylvania and Texas—also have expressed interest in the option and are in talks with administration officials.

Erin Shields Britt, a spokesperson for HHS, said, "Our goal in working with states has been to be as flexible as possible."

According to the Times, the concept of using "premium assistance" to purchase health insurance for Medicaid beneficiaries is a "sharp departure" from the original objective of the ACA's Medicaid expansion. When the ACA was passed in 2010, lawmakers intended for the expansion to benefit low-income U.S. residents with the expectation that higher-income individuals would obtain coverage through private plans in the exchanges.

Health care advocates have said that the private option would ensure that one key goal of the ACA—to extend access to health coverage to as many individuals as possible—can be met. In addition, the option might be the only way to convince Republicans to participate in the Medicaid expansion.

  • Is your state expanding Medicaid? Our Medicaid map identifies governors who say they will opt into expansion.

Advocates also have noted that Medicaid imposes strict limits on copayments and deductibles and provides benefits—including long-term care, dental services and medical devices—that might not be offered in commercial plans. However, they acknowledged that the option will, in most cases, be more costly than Medicaid because it pays higher rates to health care providers.

Federal officials have said that state Medicaid programs could provide these additional extra services as a supplement to private coverage (Pear, New York Times, 3/21).

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