States’ Rare Chance to Expand Medicaid

(Politico, April 11, 2013)

By Bill Frist

A proposal unveiled by Tennessee Gov. Bill Haslam late last month leverages federal funds to purchase private coverage for new Medicaid eligibles in the state’s health insurance exchange. In recent weeks, Arkansas became the first state to embrace a similar plan. This market-based approach, known as “premium assistance,” has piqued the interest of GOP-led states across the country, including Ohio, Florida, Pennsylvania and Louisiana. While the Obama administration has been receptive to alternative Medicaid expansion plans, a shortlist of frequently asked questions released recently did not go far enough to entice states to expand.

Since the Supreme Court’s ruling last summer, states can opt out of the Affordable Care Act’s Medicaid expansion, which extends coverage to anyone earning below nearly $16,000 per year. If every state expanded, an additional 21 million Americans could be covered through the Medicaid program. However, as of today, only 27 governors support the Medicaid expansion; 19 are opposed; and another five remain undecided. Many of those opposed are from big GOP-led states like Texas, where the opt out alone leaves millions of Americans without access to affordable coverage.

Here’s why expanding coverage for low-income people through the purchase of private insurance — premium assistance — is a good thing and why the feds need to continue to show flexibility regarding states’ private options.

Coverage numbers will be the measure by which the Affordable Care Act’s success is judged. If states do not expand Medicaid, millions of Americans will be left with no options for affordable health insurance coverage, and federal health reform could prove a hollow victory for the Obama administration. As the Medicaid program stands today, not all low-income individuals qualify for coverage. For example, 42 states offer limited or no coverage options for poor childless adults. A decision not to expand Medicaid leaves glaring inequities in coverage that federal health reform was intended to eliminate. If the administration is serious about broadening coverage and saving the most fundamental promise of health reform, then it needs to embrace new private market options.

Flexibility will get holdout states on board with Medicaid expansion sooner. There is no deadline for states to decide on Medicaid expansion, but the richest match rate of 100 percent will be available only for the first three years. If every state expanded Medicaid, the federal government would finance almost 95 percent of expansion costs over the next 10 years — that means leveraging at least $12 in federal matching funds for every $1 in state funds spent on Medicaid. In addition, the federal Department of Health and Human Services has made it clear that states can opt out after three years, the point at which a state would need to add any matching dollars. It is obviously a better deal to expand sooner rather than later — but in order to get ideologically motivated governors to adopt an expansion, states will need a way to distance themselves from Obamacare and put their own stamp on the program.

Expansion of private coverage is a good thing. I’ve written about the value of health insurance exchanges before and why we should embrace an expansion of these new competitive marketplaces. Private coverage affords higher rates of reimbursement for providers and richer networks for beneficiaries, and competition among private plans will help drive down costs. If Medicaid pays the premiums of private health plans in the exchanges, low-income people will also have the opportunity to stay on one health plan even as their income fluctuates. This means that for the 7 million people projected to move between Medicaid eligibility to the exchange or vice versa, they will be able to maintain continuity of coverage and care.

But states also must take responsibility for the expansion decision, because having health insurance matters. Governors and state legislators must acknowledge the impact a coverage expansion will have in people’s lives. It is irrefutable that health insurance improves individuals’ health and well-being. The insured are more willing to access care and ultimately, have better health outcomes. The uninsured skip preventive care and then show up at an emergency room with severe, costly, late-stage symptoms that are harder and more expensive to treat. As a physician, I’ve seen it time and again.

Governors have a very real opportunity — and a rare one at that — to advocate for some of the program reforms they want to see in Medicaid while simultaneously expanding coverage to millions of Americans. Similarly, if the Obama administration wants to entice more states into broadening coverage, it needs to accept that premium assistance will continue to be a growing segment of the Medicaid program.

Bill Frist is a physician and the former Senate majority leader.

This article was originally featured in Politico