Arkansas, the first state to establish the conservative private-plan model for expanding Medicaid
under the Patient Protection and Affordable Care Act
, now is looking to join several other conservative-leaning states in requiring low-income beneficiaries to make monthly contributions to their health coverage in the form of a health savings account.
The state has proposed to the CMS
that, beginning in 2015, its Medicaid beneficiaries would have to contribute to Health Independence Accounts (PDF)
. Beneficiaries with annual incomes between 50% and 99% of the federal poverty level would contribute $5 a month to their accounts, while those earning between 100% and 138% of poverty would pay between $10 and $25. The state would provide a matching contribution of $15 into their accounts. Money would be drawn from the accounts for copayments on medical services. Any unused funds in the accounts would be rolled over annually with a cap of $200, which the beneficiary could use for paying private insurance costs.
Failure to make the monthly contributions into their account would result in people earning between 100% and 138% of poverty having to pay all cost-sharing out of their own pockets. Traditional Medicaid features little or no cost sharing. The Arkansas waiver proposal also would limit non-emergency transportation benefits, which is opposed by patient advocates and healthcare providers.
“It's about trying to educate this population about healthcare and healthcare costs and insurance and how it all works,” said Amy Webb, a spokeswoman for the Arkansas Department of Human Services. “Many of these people have never had health insurance before, or it's been a very long time since they had health insurance, so they're not used to navigating this world. The legislators wanted to give them something that's kind of an educational tool and that would also make them invested in their healthcare.”
Some observers predict the Arkansas proposal has a reasonable chance of receiving approval from the Obama administration, though perhaps with some modifications such as removing the cost-sharing requirements for people earning less than 100% of poverty. The reason the administration may give it the green light is because Arkansas' Republican-controlled legislature will have to renew the Medicaid expansion next year and is less likely to do so without these conservative-supported changes.
If lawmakers don't renew it, more than 175,000 Arkansans would lose coverage. And the administration's effort to persuade other conservative-leaning states to adopt Medicaid expansion would suffer a big setback, given that Arkansas and its Democratic Gov. Mike Beebe led the way in finding a compromise approach under which the state uses federal Medicaid expansion funds to buy low-income adults private coverage through the federal insurance exchange.
Similar health savings account programs for Medicaid beneficiaries exist in Michigan, which has expanded Medicaid, and Indiana, which has not. Michigan's program only applies to people earning at least 100% of poverty. Indiana's Republican Gov. Mike Pence wants to include the savings account feature in his Medicaid expansion proposal. Pennsylvania's Republican Gov. Tom Corbett also wants to require Medicaid beneficiaries to make monthly contributions as part of his pending waiver request for expanding Medicaid. Iowa also requires a premium contribution for people earning at least 100% of poverty.
Webb said Arkansas' plan looks to incentivize beneficiaries to become more invested in their healthcare. Supporters argue that such cost-sharing and patient engagement features are needed to curb inappropriate use of emergency departments, prescription drugs and other medical services.
But critics contend these types of cost-sharing programs will discourage people from signing up for Medicaid and delay them from seeking needed medical services. For those with chronic diseases that can be managed, such delays can lead to higher medical costs down the line.
A decade ago, Oregon required
Medicaid beneficiaries to make premium contributions, increased copayments and imposed penalties for nonpayment. Enrolled plummeted 77% within 2 ½ years, and the state uninsured rate jumped from 11% to 17%.
“Even modest co-payments have a detrimental effect on utilization,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “It doesn't mean that people won't use healthcare but they'll use less than if they didn't have those co-payments.”
Such programs also can have a negative financial impact for healthcare providers. Those receiving reimbursement through Medicaid see a reduction in payments due to a decline in patients, according to a 2013 analysis conducted by the Kaiser Commission for Medicaid and the Uninsured (PDF)
The Kaiser report said imposing premiums and cost sharing on Medicaid beneficiaries can result in declines in coverage and utilization that can produce some savings for states. But those changes may be offset by additional administrative costs to implement the state Medicaid requirements and can lead Medicaid patients to rely more on already-strained safety net providers. In addition, the report said, Medicaid providers frequently report difficulty collecting cost-sharing, thus lowering provider payments.
Arkansas was the first state to receive approval from the CMS last year to introduce the private plan option for expanding Medicaid to all adults earning up to 138% of poverty. The plan served as the model for other conservative states with Republican governors or legislative leaders opposed to Obamacare to find expand Medicaid in a more politically acceptable way.
“This has already been approved in Arkansas and it's already in place covering hundreds of thousands of people, so I think it would be hard for both CMS and the state to walk away from it right now,” said Joe Touschner, senior health policy analyst at the Center for Children and Families at Georgetown University. “I think there's a good chance that they'll come to some sort of an agreement—whether that looks exactly like what Arkansas has proposed I don't know, but I think they'll find some way to move forward.”
Speaking Monday at the Medicaid Enterprise Systems Conference in Denver, Cindy Mann, the CMS' director of Medicaid and the Children's Health Insurance Program, called on state agencies to switch from workaround enrollment systems put in place during the first open enrollment period and to enact Medicaid enrollment systems by the end of the year.
"I think we are in a very strong position in terms of the foundation that has been built,” she said, according to Politico Pulse
. “Those workarounds were put in place around the time the ACA took effect to mitigate the crush of newly eligible beneficiaries. We need to challenge ourselves for this year to keep improving each quarter, work through all of our mitigation.”
Wisconsin could have saved $206 million over the next two years
if Republican Gov. Scott Walker and the Republican-led Legislature had decided to expand Medicaid to low-income adults under the ACA, according to a report by the nonpartisan Legislative Fiscal Bureau.
The report found that the state could save up to $315 million through June 2017 if officials decide to expand the program in the near future. A total of more than $500 million could have been saved as a result of expanding Medicaid, the report finds. Follow Steven Ross Johnson on Twitter: @MHsjohnson