Kent raised a great question/scenario yesterday in comments:
I started the process of trying to get my 55 year old brother onto his first ACA plan. Some questions and confusion and I welcome any advice.
First he lives in Alaska and which is a medicaid expansion state that uses the federal exchange. I went on the exchange on his behalf and it turns out he is right at the borderline of 138% of poverty level so can go either way, an ACA plan or Medicaid. His 2020 income put him below the 138% but he is also a tile and stone contractor with an aggressive accountant and so they managed to take probably $45,000 of income and push it down to about $18,000 with aggressive business deductions. He could easily be slightly less aggressive in 2021 to qualify for an ACA plan. So…questions.
First, given a choice between ACA and Medicaid, is it the obvious choice to go with a Blue Cross ACA plan? I’m not really sure which way to advise him here. He has the ability to manipulate his income to go either way.
Really good question — if someone is near the boundary for either Medicaid Expansion OR ACA Silver CSR-94 plans what should one choose?
First, it is quite plausible for someone to qualify for both Medicaid and ACA subsidies at the same time. Medicaid uses monthly income to determine eligibility. The ACA uses estimated annual income with reconciliation on the back-end to determine subsidy eligibility and level of subsidy. If someone works in a seasonal industry, they could have a low cash month to qualify for Medicaid even if their annual income has them earning over 138% FPL. This has been the case since 2014. Since 2020 with the CARES Act, Medicaid enrollment is stickier as states can not redetermine income to remove people from Medicaid coverage. And all of this happens without needing an aggressive accountant. An aggressive but legal accountant can help.
There was a recent paper in JAMA Open Network by Heidi Allen et al** that looked at what services did people right on the boundary between Medicaid and ACA plans use, what were the cost-sharing obligations and what was the quality of care between the two programs. They used Colorado data.
So what did they find?
This cross-sectional study of 8182 participants used a propensity score–matched sample narrowed to 5 percentage points above and below the federal poverty level threshold that separates Medicaid and Marketplace eligibility (138%). Marketplace coverage was associated with fewer emergency department visits and more office visits than Medicaid, total costs were 83% higher in Marketplace coverage owing to much higher prices, and out-of-pocket spending was 10 times higher in Marketplace coverage; results for quality of care were mixed.
Cost-sharing for ACA plans is way higher. Doctors and hospitals made more money on ACA plans due to higher reimbursements, less emergency department use for ACA plans (probably due to high cost-sharing) and quality was leaned to advantage ACA plans.
So what is the take-away for someone who is on the border?
Under current law, they are likely paying a monthly premium for ACA plans and are exposed to significantly more cost-sharing as most CSR-94 plans will have out of pocket maximums ranging from $450 to $2,850.
There may be value in an ACA plan in that it may have a better to you network, although the least expensive plans tend to be narrower networks. Even if the networks between Medicaid and the lowest cost silver plan on the ACA are nominally the same, there could be an argument that appointments are more likely/convienent under the ACA plan than Medicaid. But that network value does come at significant cost-sharing exposure and likely higher monthly premiums.
If someone is looking for insurance to provide protection against meteors, heart attacks and buzz saws slicing off a finger or three, then both Medicaid Expansion and ACA plans provide that protection. Medicaid Expansion will provide that protection at lower cost to the individual than ACA plans.
** Allen H, Gordon SH, Lee D, Bhanja A, Sommers BD. Comparison of Utilization, Costs, and Quality of Medicaid vs Subsidized Private Health Insurance for Low-Income Adults. JAMA Netw Open. 2021;4(1):e2032669. doi:10.1001/jamanetworkopen.2020.32669
Thanks for the write-up. I’ll pass the recommendations on to my brother.
He is probably in a fairly common situation for self-employed blue collar folks. He probably makes $40-50 thousand per year in his sole proprietor contracting business. He does high-end residential tile and stone work (kitchens and baths). But he has an aggressive accountant and they seem to manage to bend his AGI down into the $18-20k range through a LOT of business write-offs like tool purchases, leasing a new shop truck, business travel, etc. etc. He’ll fly to Vegas, for example, for some sort of contractor-related convention and write the whole thing off as a business expense.
So right now he can probably push his income to either side of the Medicaid/ACA line. I expect he will rather have private insurance, even at the higher cost. Because Medicaid still has a stigma of sorts. I’ll do my best to explain the pros and cons of either route to him and make sure he gets something. At least he is in the position of being able to legally cook his books one way or the other to qualify for the sort of coverage that he wants.
You got to wonder how much cost and impact these continual administrative over burdens, personal calculations, and regulatory barriers have on the productivity of the person and on this country as a whole. To stretch a point, this is just as complicated, if not more, than choosing an electricity plan in Texas. The average (meaning about 80-90%) person cannot process all the variables to go into the decision process. Especially when the system is gamed against them.
Yep. All arguments in favor of single payer. We put up with a tremendous amount of bullshit and inefficiency in order to maintain the private insurance industry. It is what it is.
From the perspective of cost — and most notably cost sharing — Medicaid will always win out. The salient point not considered in this response is the person’s relationship with employment. If chances are decent that your income will go up over time, you will have a more stable experience if you enroll in an exchange plan. Loss of Medicaid eligibility is a real impediment to continuity of care. If your work status includes intermittent bouts of unemployment, seasonal employment or part-time work — for instance, because you have health issues or care for a sick child or other family member — it is likely that you will retain your Medicaid eligibility long term, and cost is even more decisive given less steady income stream.
@Barbara: In most other contexts, I would agree with you, but given CARES, I would not be particularly be concerned about reclassification risk for all of 2021.
One thing to track if going with Medicaid is how the coverage is administered in your state. I helped someone a couple years back navigate this when they lost their parents’ coverage – here in Ohio there are 5 or so different companies that serve as benefit administrators and new enrollees are assigned to one – and it _really_ matters which you get. BUT, there is a time frame when first enrolling to request a different company. So just like picking a regular insurer, we checked to see it their doctors were authorized providers in the networks. First, we checked the plans’ webpages (that narrowed it down to two), then we called their doctor’s offices’ billing department to double check – and it turned out that one of the two plans _wasn’t_ actually accepted – doc’s office said they had too much trouble getting paid and had dropped them a few years before. When I mentioned they were still listed on the plan’s website she said that they had notified the company repeatedly but it never changed. Research is everything when it comes to picking coverage. How do people who aren’t retired and in decent health find the time and energy to do all this on top of the actual required paperwork? Single payer now!