The Medicaid private option policies designed to insure low-income individuals through a more market-based system is showing early signs of success, but also hurdles.
In Arkansas, where the Medicaid private option was pioneered, the uninsured rate has fallen from 22 percent at the end of 2013 to 12.4 percent in June -- the most significant reduction in the country.
Under the Medicaid private option, low-income residents earning up to 138 percent of the federal poverty level -- individuals who would be eligible for Medicaid under the Affordable Care Act's expansion -- have been able enroll in subsidized private health plans selected via the state insurance exchange.
In addition to the drop in the uninsured population, the policy seems to be stemming the problem of uncompensated care for providers.
For the first half of 2014, overall inpatient hospital admissions have remained pretty stable, increasing less than one percent, while the number of uninsured hospitalized patients with no source of payment fell by 46 percent, a joint survey by the Arkansas Hospital Association and Arkansas Chapter of the Healthcare Financial Management Association.
The survey also found that uninsured emergency department visits have declined 35 percent and uninsured outpatient clinic visits by almost as much, 36 percent.
The increase in insured patients did contribute to an overall 5.8 percent increase in non-urgent hospital outpatient visits, the survey found, but that suggests "more patients are beginning to avoid emergency rooms as a point of entry into the healthcare system and instead are seeking care in more appropriate settings," the analysts said. Total visits to emergency rooms only increased by about 2 percent in the first half of the year.
Overall, the combination of more insured patients and lower uninsured patients brought uncompensated care at Arkansas hospitals down by 56 percent.
The emergence of the market-based approach to Medicaid expansion in Arkansas, and the federal government's willingness to approve them, has spurred other states to pursue similar policies.
Iowa's alternative Medicaid expansion is offering premium assistance to newly eligible adults above 100 percent of the poverty level, and covering those below the threshold through Medicaid-managed care. Michigan and Pennsylvania also received federal approval to enroll expansion-eligible beneficiaries in managed care plans that also incorporate small co-pays, cost-sharing and incentives to complete wellness exams and use primary care.
Iowa's Health and Wellness Plan is already making a dent in the uninsured seeking hospital care. In the first six months of 2014, the number of Iowans hospitalized without insurance fell by 45 percent, according to the state hospital association.
The exchange plans for the low-income population earning between 100-138 FPL have come with risks that have been difficult for some insurers to manage though.
The nonprofit CoOportunity Health is pulling out of the program after high utilization led to unspecified financial losses. "As a nonprofit, member-governed new health plan, we cannot ask our 85,000 other members to pay higher rates to subsidize the 9,700 (Iowa Marketplace Choice) members," the company said in October.
Six months into Michigan's program, enrollment is exceeding expectations, while managed care organizations wait to see utilization rates and the effects of new wellness incentives and co-sharing.
The Healthy Michigan Program does not use premium assistance to help individuals below 138 FPL buy insurance, but introduces market-based provisions to managed care plans that give beneficiaries some skin in the game. Those earning between 100 and 138 percent of the poverty level start paying small monthly fees, along with copays after six months, and contribute up to 2 percent of their income into health savings accounts. There are also financial incentives for beneficiaries to address health problems like obesity, smoking and preventive care.
The other state that sought a private option Medicaid policy, Pennsylvania, now seems likely to adopt traditional Medicaid expansion, as a new Democratic governor takes office. And in Arkansas, the private option policy faces an uncertain future.
The policy was designed and supported by Republican legislators in a compromise with outgoing Democratic Governor Mike Beebe. But continuing the program will require a three-fourths vote by both the state house and senate, and a new crop of conservative state lawmakers elected in the November mid-terms include more than a few who are opposed to almost any spending related to the Affordable Care Act.
"I think the private option is going to cost Arkansas taxpayers too much money and it is not going to be a viable long-term program," incoming state senator Scott Flippo, who defeated key private option architect John Burris in a GOP primary, told The Baxter Bulletin. Incoming Republican Governor Asa Hutchinson has said he wants to review the policy before making a decision, and will start the process in January.