Adrianna Macintryre, Allen Joseph and Nicholas Bagley had a recent perspective in the New England Journal of Medicine regarding the possibility of a partial Medicaid expansion model. I want to explore some of the distributional and macro-economic implications of this possibility. (Disclaimer, I helped Adrianna with some of the data). But first, let’s see the argument and the potential policy:
another decision of arguably greater long-term significance has been overlooked: whether to allow “partial expansions” pursuant to a state Medicaid waiver. Arkansas has already submitted a waiver request for a partial expansion, and other states may well follow its lead… waivers became more consequential in 2012, when the U.S. Supreme Court gave states a choice about whether to expand their Medicaid programs to cover everyone with an income of up to 138% of the federal poverty level.
In general, Obama-era expansion waivers permitted adoption of rules congenial to Republican policymakers….
These waivers, however, did not grant red states everything they requested. The Obama administration refused to approve waivers that would have conditioned Medicaid eligibility for some beneficiaries on their ability to find work. It denied waivers that would have terminated coverage for beneficiaries with incomes below the poverty level if they failed to make out-of-pocket payments for medical care. And it declined states’ requests to partially expand their Medicaid programs to enroll beneficiaries with incomes up to 100% of the poverty level, but not those between 100% and 138%.Why were states interested in these partial expansions? Starting in 2020, states are responsible for covering 10% of the costs associated with the Medicaid expansion. Because of a drafting mistake, however, the ACA says that the 100-to-138 population can receive subsidies to purchase a private health plan on the exchanges — but only if they are ineligible for Medicaid. For those people, the federal government bears the entire cost of subsidizing private coverage, with no contribution from the states. As a result, the states save money for every beneficiary whom they can move from Medicaid into their exchanges.
The waivers that have been approved for non-standard expansions to 138% FPL have had premiums and cost sharing. Premiums have been limited to 2% of income and cost sharing is limited to 5% of income. That roughly translates to $20 per month in premiums and a $600 deductible. This is the level of a 94% Actuarial Value Silver plan with Cost Sharing Reduction (CSR) subsidies.
The distributional consequences are important. For people who earn between 100-138% FPL in states that have not expanded Medicaid, nothing will change for them. They are no worse off. People who live on less than 100% FPL in these states will be dramatically better off as they will have Medicaid for their coverage. People who earn between 100-138% FPL in waiver states won’t be significantly worse off. A few benefits (vision and non-emergency transportation for instance) may no longer be available but these are marginal changes. People earning under 100% in waiver states won’t see a change.
The major area of change would be individuals who earn between 100-138% FPL and live in states that made a straight forward Medicaid expansion. These individuals will have higher premiums and higher cost sharing. They would be worse off if Pennsylvania or Louisiana or Oregon or anywhere else with a simple expansion reduced the expansion eligibility to only 100% FPL and shifted them onto the Exchanges.
If this is primarily a tool used by states that have not expanded Medicaid or have current cost sharing and premium requirements through Obama era waivers, then the distributional consequences have minimal harms and significant improvements.
I want to geek out a bit below the fold on secondary points.
Medicaid partial expansion’s consequencesPost + Comments (4)