Arkansas Medicaid model may raise out-of-pocket costs

It goes without saying that people on Medicaid don't earn much money. While state programs' health benefits differ from state to state, all must have very low co-pays and deductibles to earn the federal match. The same will be true for those states that expand their Medicaid programs to cover people earning up to 138% of the poverty level.

The CMS is considering an Arkansas proposal to use its Medicaid expansion money to subsidize purchase of individual insurance coverage on the state's exchange. A CBO report concluded that buying private plans would cost the federal government a lot more than simply expanding Medicaid.

And today a new issue brief from Health Affairs said it could wind up costing the uninsured who are newly eligible for Medicaid a lot more, too. “When it comes to cost sharing, the difference between Medicaid and private plans is substantial,” the brief said, citing a 2006 study that found a seven-fold difference between low-income adult's annual out-of-pocket costs with private coverage ($771) compared to Medicaid ($106).

You can read the entire brief here.

Follow Merrill Goozner on Twitter: @MHgoozner