The premise of my book Balancing the Budget is a Progressive Priority is that the most important long run budget issue is developing a set of health care cost controls that we will actually try. I frame a set of policies that I claim represent what a political deal between Democrats and Republicans would look like to take the next step after the ACA. Arkansas is planning to use Medicaid expansion money to purchase private health insurance in exchanges for low income persons. The details are very important, which are still unclear. However, this is reminiscent (in part) of one of my proposed “next steps” for health reform (p. 64-65 of my book).
Acute care Medicaid would be covered by federally-guaranteed catastrophic coverage I suggest with states being responsible for premium support to purchase private gap insurance policies for them. There are 45-50 million such persons, and the ACA will increase this group by 16 million by 2021. These beneficiaries are numerous, but are the cheapest Medicaid beneficiaries on a per capita basis because most of them are young and relatively well.
The total cost of the Dual eligible beneficiaries will become the responsibility of Medicare, which now covers their acute care costs, while Medicaid currently pays for most of their long term care. There are around 9 million such persons, and these are the most expensive persons to care for in the entire health care system on a per capita basis.
Long term disabled who are not eligible for Medicare will be covered by federally-guaranteed catastrophic coverage supplemented by state-paid gap insurance. There are around 5 million such persons. This is a varied group with many different types of needs, and will likely be the most complicated group to transition away from
Arkansas is only trying something similar to the first part of this suggestion (buying low income beneficiaries into private insurance sold on exchanges), and not the changes to the financing responsibility of the dual eligibles. And to be clear, the biggest problems with acute care Medicaid are primarily politically based. I went on in the book to say (p. 65):
The logic behind the proposed changes rests in the different needs of the “three programs” represented within Medicaid. Those covered by acute care Medicaid (45-50 million persons) most of them pregnant women and children, are relatively inexpensive to care for on a per capita basis. Increasingly, such beneficiaries have trouble finding providers who will care for them, due to a double whammy of stigma (it is insurance for persons who are poor) and the fact that it pays providers below what Medicare pays, which is less than what private insurers pay. This has lead to a systematic access problem for some Medicaid beneficiaries who have trouble finding a physician willing to treat them. There is nothing inherently wrong with the structure of Medicaid; we could decide to make it the best payer of care tomorrow, but that of course, is not going to happen. Buying them into private insurance policies will mainstream their care and remove a layer of cost shifting. [emphasis added]
It is important to say that I don’t see how this won’t cost more, not less. On balance, I think the benefits of doing this outweigh the problems. Especially as compared to doing nothing/not expanding Medicaid…and the political calculations for States are paramount; no way around that. Interesting times, with many states trying many things.
similar post cross posted at freeforall