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White House Urges States To Consider Private Insurance for Medicaid Expansion

White House Urges States To Consider Private Insurance for Medicaid Expansion

March 22, 2013 — The Obama administration is encouraging states resistant to the Affordable Care Act's (PL 111-148) Medicaid expansion to consider an alternative plan that would allow them to shift low-income, Medicaid-eligible residents to private health plans offered through health insurance exchanges, the New York Times reports.

HHS already has given Arkansas "conceptual approval" to use Medicaid funding to help low-income adults enroll in private health plans through the state's exchange, according to Andrew Allison, Arkansas' Medicaid director.

Ohio is in negotiations with the administration on a similar plan to use federal Medicaid funds to pay for commercial insurance premiums that will be available to state residents through Ohio's federally run exchange. Republicans in other states -- including Florida, Louisiana, Pennsylvania and Texas -- also have expressed interest in the option and are in talks with administration officials.

Erin Shields Britt, a spokesperson for HHS, said, "Our goal in working with states has been to be as flexible as possible."

Stakeholders Debate Merits of Alternative Proposal

According to the Times, the concept of using "premium assistance" to purchase health insurance for Medicaid beneficiaries is a significant departure from the original objective of the ACA's Medicaid expansion. When the ACA was passed in 2010, lawmakers intended for the expansion to benefit low-income U.S. residents with the expectation that higher-income individuals would obtain coverage through private plans in the exchanges.

Health care advocates have said that the private health plan approach would ensure that one key goal of the ACA -- to extend access to health coverage to as many individuals as possible -- can be met. In addition, the option might be the only way to convince some conservative states to participate in the Medicaid expansion.

Advocates also have noted that Medicaid imposes strict limits on copayments and deductibles and provides benefits -- including long-term care, dental services and medical devices -- that might not be offered in commercial plans. They acknowledged that the private health plan approach will, in most cases, be more costly than Medicaid because private plans typically pay higher rates to health care providers.

Federal officials have said that state Medicaid programs could provide these additional services as a supplement to private coverage (Pear, New York Times, 3/21).