HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Thursday, May 9, 2013

ACA Medicaid Expansion and Private Insurance

Among the many states with Republican governors balking at taking federal money for the ACA Medicaid expansion, a few such as Arkansas and Ohio are exploring a compromise with HHS: use Medicaid expansion money to purchase coverage through health exchanges for people whose income level (up to 138% of poverty) qualifies for the expansion. The proposals are modeled on the use of Medicaid funds to purchase employer-provided insurance for people who qualify for Medicaid and cannot afford their employers’ insurance. But the strategy is fraught with peril.

According to a Kaiser Family Foundation issue brief, two problems with the premium assistance proposals are paramount: whether they will provide the levels and types of coverage that Medicaid would provide and whether they will turn out to be more expensive than direct expansion of Medicaid coverage would be.

With respect to levels of coverage, current premium assistance programs require states to provide “wrap-around” coverage for gaps between Medicaid and employer-provided insurance. The essential benefit package required for plans offered through exchanges are benchmarked to existing plans in their respective states. Thus there will be considerable differences among the states in plans offered through the exchanges. Needed wrap-around coverage will vary accordingly. States such as Ohio, however, are seeking to negotiate with HHS to obtain waivers for the wraparound requirements and threatening to reject the Medicaid expansion if they are not given flexibility.

With respect to cost, programs must demonstrate cost effectiveness in the sense that they provide the same levels of coverage (including wrap around) for equivalent costs. According to the Kaiser issue brief, difficulties on this score may also be significant. Premium assistance programs to date have been fairly small and focused on populations where cost-savings can be expected. On the other hand, an advantage may be allowing families to purchase the same insurance for all family members.

At the recent tenBroek symposium, disability rights advocates voiced particular concern about the prospect that HHS might consider granting states waivers for wraparound coverage.  Coverage for home health services, durable medical equipment, or longterm care may be particularly important for people with disabilities but not included in essential benefit packages offered through exchanges.  If HHS does agree to flexibility in wraparound coverage, important safety net benefits may be lost despite expansion of Medicaid coverage.


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