The pressure is growing on Republican Governors to expand Medicaid in some way, and more state executives are turning to managed care and market-based approaches to bring in federal dollars.
Tennessee Governor Bill Haslam is the latest to propose a Medicaid expansion policy that broadly falls under the category of "private option," a model using privately-run health plans for Medicaid beneficiaries pioneered by Arkansas, also in use in Iowa and being developed elsewhere.
Haslam's Medicaid waiver proposal, called Insure Tennessee, would give as many as 200,000 low-income Tennesseans access to Medicaid coverage under two routes -- managed care plans with health reimbursement accounts (HRAs) or vouchers to buy an employer-sponsored plan and out-of-pocket medical expenses.
Currently in Tennessee, adult parents earning up to 105 percent of the federal poverty level are eligible for Medicaid. Childless adults in Tennessee and 16 other states are not eligible for Medicaid at any FPL.
"We made the decision in Tennessee nearly two years ago not to expand traditional Medicaid," Haslam said. "This is an alternative approach that forges a different path and is a unique Tennessee solution."
Haslam said his proposal has five aims: fiscal soundness, bringing individuals more choice, expanding "outcomes-based" payment models, incentives for beneficiaries to "take more personal responsibility" and preparing them for "eventual transition to commercial health coverage."
For Tennesseans earning 138 percent of the federal poverty level, the bottom end of the threshold for exchange subsidies, there would be two options within the Insure Tennessee policy.
Under a Healthy Incentive Plan, beneficiaries could choose to enroll in a Medicaid managed care plan with a type of incentive account modelled on HRAs to pay for cost-sharing. Under a Volunteer Plan, beneficiaries could access an insurance voucher valued at slightly less than the average per-enrollee cost for Medicaid, to pay for premiums at a health plan offered by employers and associated out-of-pocket costs.
Beneficiaries earning above 100 percent of the poverty level would be required to pay some premiums, with the option to earn contributions to accounts to cover those costs by "performing healthy behaviors," such as annual primary care visits, quitting smoking and taking health risk assessments.
Haslam is seeking a two-year waiver from the federal government and also would need to work with the legislature to enact the program. If approved by the Centers for Medicare & Medicaid Services, Tennessee's waiver program would be the first to include a voucher for employer-sponsored insurance and could continue a trend of market-based policies such as nominal beneficiary cost-sharing.
"Our approach is responsible and reasonable, and I truly believe that it can be a catalyst to fundamentally changing healthcare in Tennessee," Haslam said. "It is our hope that this plan opens the door in the future for innovation within our existing Medicaid program."
The emergence of a Medicaid expansion proposal to cover the uninsured is welcome news to providers in Tennessee.
"For the past two years, THA's number one priority has been securing Medicaid expansion in our state," said Tennessee Hospital Association president Craig Becker.
Becker continued that Insure Tennessee presents a meaningful alternative to traditional Medicaid expansion.
"The working uninsured in our state currently find themselves in a coverage gap that results in limited access to healthcare. Insure Tennessee can close this gap and help our neighbors and loved ones find quality coverage and access to care," Becker explained. "These individuals are hard-working Tennesseans who sometimes hold down multiple jobs and many have even served our country in the armed forces."
In total, 24 states have declined to expand Medicaid, although more Republican Governors have been expressing a willingness to consider leveraging the ACA's expansion policy, 100 percent federal funding for new beneficiaries for three years and 90 percent coverage thereafter. Most recently, since the GOP midterm wave, two conservative Governors, Matt Mead of Wyoming and Gary Herbert of Utah, have proposed the idea of using alternative Medicaid expansion policies.
CMS has also proven willing to consider market-based ideas as long as they don't impose undue burdens of beneficiaries. In 2013, Arkansas was the first state to get a waiver for a "private option" expansion, where new beneficiaries received subsidized coverage via insurance exchanges. Over the past year, Iowa and Michigan started waiver-based Medicaid expansion programs modelled on Arkansas, and Pennsylvania won approval for a similar plan, although a newly-elected Democratic Governor is expected to opt for traditional expansion.