Some Milton Friedman-esque critics of U.S. healthcare policy have long suggested that low-income people would be better off with insurance vouchers rather than Medicaid -- and now that approach is actually getting a chance.
The so-called private option that the Department of Health and Human Services is set to approve via a waiver for Arkansas may create a "great new experiment" in public health insurance policy, while also reducing the perennial Medicaid problem of eligibility "churn," write health researchers Sara Rosenbaum and Benjamin Sommers, MD, in the New England Journal of Medicine.
In tandem with Affordable Care Act eligibility expansion, the premium-support model for Medicaid t could go a long way towards improving enrollment stability and continuity of care for patients in states like Arkansas that currently have restrictive eligibility criteria, write Rosenbaum, a George Washington University law professor, and Sommers, a Harvard economics and medical school professor.
Arkansas Medicaid is currently available only to adults with children who have incomes less than 17 percent of the federal poverty level (FPL), about $4,000 annually for a family of four, and Texas, South Carolina and Louisiana, among others, have similarly restrictive eligibility.
With ACA premium support subsidies only available to people making between 100 and 400 percent FPL, people earning below that threshold in states that don't expand Medicaid eligibility may be left with no options for government support -- a large barrier to the ACA's goal of universal coverage.
In Arkansas, though, the private option emerged as a more market-based policy that could get some Republican support, and it may end up being better off for beneficiaries, Rosenbaum and Sommers argue.
They estimate that some 28 million poor adults could "churn" between eligibility for Medicaid and exchanges annually, due to how much their income varies. If someone with a Medicaid-subsidized private health plan earns 90 percent FPL one year, and then earns 150 percent FPL the next, they could in concept keep their health plan and their doctors, with only their premium cost sharing changing.
"Without health plans spanning both markets, shifts in financing could disrupt coverage and care," Rosenbaum and Sommers write. "Buying exchange plans with Medicaid funds might shield families from the effect of small income shifts, since they could keep their plans and providers regardless of whether Medicaid or federal premium subsidies were paying the bill at any given moment."
In states with restrictive Medicaid eligibility, like Arkansas, Rosenbaum and Sommers estimate that purchasing exchange coverage could reduce churning for ACA expansion populations by about 60 percent.
However, in states with higher Medicaid eligibility income thresholds, churn might increase with a private option.
In Ohio, where pre-ACA income limits are set at 90 percent FPL for adults with minor children, a private option policy could create churning -- although there "would still be less churning than there would under a Medicaid expansion that doesn't use premium assistance," Rosenbaum and Sommers estimate.
The problem of churning, identified (and given that name) as far back as the 1970s, is one some states are already trying to address.
Oregon lawmakers are considering a bill that would direct the Oregon Health Authority and the insurance exchange Cover Oregon to find potential long-term fixes to churn while ensuring, in the short term, that qualified health plans offer similar networks to Medicaid, after state health officials estimated that by 2016 as many as 60,000 Oregonians could be shifting back and forth between Medicaid and HIX subsidy eligibility.