Health policy query: Should (some) Medicaid patients be channeled into exchanges?

In similar fashion to my previous post. Calling all health policy wonks: What are some good arguments–pro and con–regarding governors’ requests to transfer Medicaid recipients into the new health insurance exchanges? I’m naturally suspicious, but not from a careful evidence-based perspective.

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect,, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

7 thoughts on “Health policy query: Should (some) Medicaid patients be channeled into exchanges?”

  1. One question on the practical side of things is how this would work given that, as the law is written now, the subsidies for exchange-purchased insurance plans are only available for those between 100% and 400% of the poverty line. So while subsidies are available for the newly eligible (those in the 100-133% range), it would appear that most Medicaid beneficiaries would not be eligible for the subsidies, and therefore would not be able to obtain insurance through the exchanges. And here’s another wrinkle: the tax credits are only available for plans purchased in state-run exchanges (those under Section 1311), not under federally run exchanges (those under Section 1321).


  2. I don’t like Medicaid– the one public insurance program that doesn’t work very well– very much, but I have to say that since the fundamental problem with our insurance system is that for-profit insurance companies do not have the incentive to deliver care (because the more care they deny, the more money they make) and have the wherewithal to capture legislators and regulators to protect their ability to make their profits, any transfer of people out of public insurance and into private insurance is probably a very bad thing long term. We will actually never solve our health care crisis and achieve universal health care until we eliminate the role of for-profit health insurance companies; since exchanges don’t do that and in fact entrench private for-profit insurance companies, the correct strategy is to contract them and expand the public provision of health care over time, not the reverse.

  3. Well obviously the reason the governors want this done is because Medicaid is paid for partly by the states and the exchange plans are paid for entirely by the feds and the individuals. That would give the governors free money to support their tax cuts. It’s the same old story: they want to strengthen states’ rights and take power away from the federal government by giving the states the right to make the federal government take over their responsibilities.

    The issues Jonathon brings up would need to be solved by new legislation (necessary to accommodate the governors’ requests anyway). Moving people from Medicaid to heavily subsidized exchange plans would both increase total costs and increase the federal governments’ share of those costs. It would increase insurance company profits and decrease costs to the states. The big unanswered question is how cost sharing would be done when some states are keeping people on Medicaid and others are dumping them onto the exchanges. The obvious arrangement would be to charge states the same cost-share they would have had under Medicaid (really more, because exchange plans are more expensive). But the whole point for the abdicationist (is that a word?) governors is to get out of paying. They seem to think they can cheat the system and get the feds to take their burdens free of charge. Or maybe they just want to dump their Medicaid recipients into unsubsidized plans (aka no health care).

    As far as patients are concerned: The subsidies available to the lowest eligible income bracket for the exchanges cover almost the entire premium, so it could be a viable replacement to Medicaid. The exchange plans will probably be better than Medicaid too, because Medicaid reimbursement is so stingy that many places won’t accept it. So it could be a circuitous route to slightly better coverage at much higher cost to the federal government. However, there may be other problems I’m not really aware of; for example I think the exchange plans have higher deductibles than Medicaid.

    Couldn’t this all be accomplished much more easily by federalizing Medicaid and improving its reimbursement rates? Or just merging it into Medicare? Well of course.

  4. I actually have an immediate family member on Medicaid — because my son has a developmental disability, he receives Medicaid coverage through a waiver.

    I freely admit I understand next to nothing about how an insurance exchange might work. I understand though, that the private health insurance benefits my husband receives through his job are very complex. Every year, there’s reading over the literature on the various options in order to best guess which one might be a better choice for us.

    There are all sorts of predictions and decisions to be made, on very little data: Hmm, only one dependent can get dental coverage? Who do we think might rack up the highest bills this year? Mom? Most of hers is related to gum disease, better check if that is covered, and to what extent. Or Junior? Is he going to need braces this year, and are those covered, and for how much?

    And that’s just the beginning. Many important variables can’t even be determined: which company is going to play the least games and pay up most promptly? We are college-educated and my husband is a math genius, and it’s hours of work.

    I can’t help but think that throwing my kid into an exchange is going to make our other health coverage decisions look easy in comparison. Please, we have enough stress in our lives!

  5. I’m not a health policy wonk, but I am totally against it. I consider this the “let’s replace the Medicare advantage boondoggle with a Medicaid advantage boondoggle proposal.” A key difference between the exchanges and Medicaid is that the exchanges provide insurance through private insurance companies. This implies higher administrative costs and that some of the Federal money would go to health insurance company profits. Also private insurance companies pay providers more than Medicaid, so they too would get more money at the expense of the Federal government.

    It seems to me to be a proposal from Governors to take Federal money and give it to firms and individuals in their state. No surprise and no reason to even consider saying yes.

    I’m not sure that they are trying to get out of paying the state share of Medicaid. The expansion of Medicaid is fully Federally funded and people have to be over the poverty line to get subsidies on the exchanges. I don’t know which governors are doing this. If they govern states which already have generous Medicaid, then the shift would also help the State budget at Federal expense. If their states gave no Medicaid to anyone over the poverty line, then they are doing it on behalf of private agents.

    In any case the Federal Government has no money to spare, or, more exactly, has no willingness to spare anti-poverty programs if it has to find some more money to send to insurance companies, health care providers and (maybe) states.

  6. I think having a goal of ending acute care Medicaid by rolling them into exchanges is a good idea. States could decide what extra $ or services low income persons would need. It would remove the stigma and would add people to the exchange markets; not clear what exchanges will do to the premiums but this would add more to purchasing pool. The long term care part of Medicaid should be federalized to give Medicare the maximum incentive and ability to address cost and quality problems experienced by dual eligibles. Also, there are many barriers to dual eligibles living in nursing homes being able to access hospice care that are due to Medicaid/Medicare interactions.

  7. I am not a wonk, but I think one reason – perhaps *the* reason – Medicaid gets the shaft is that it’s for poor people. Why not stick them all in Medicare instead?

    I know it can’t happen now, politically, but someone should raise the issue. We should keep asking why not Medicare for all until we get it. It is the best, simplest and most cost-efficient solution, I think.

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