A year ago, Medicaid expansion was under intense assault, and the threat of repeal was all too real. In the face of these attacks, the Nevada Legislature asked a simple question: if the federal government eliminates Medicaid expansion, why not allow those losing Medicaid to buy it back? Individuals with incomes between 100-138 percent of the federal poverty level (FPL) receive high subsidies on the Affordable Care Act (ACA) Marketplace to buy insurance. If they could use these subsidies to buy Medicaid coverage, they could keep their health insurance with the federal government footing most of the bill.
The Nevada bill died, but the idea did not. Other states have proposed using these so-called “buy-ins,” not as a substitute for Medicaid expansion, but rather as a way to address other problems with the ACA Marketplace. In the past year, legislators in at least six states have introduced bills either to create an actual “Medicaid buy-in,” or to create task forces to study it. After all, the concept of a “public option”, i.e., a public health insurance plan to compete with health insurance plans on the private market, has been bandied about for years. So is now the right time and is Medicaid the right vehicle?
Buy-ins have the potential to achieve a variety of goals. They could provide a new coverage option that may be more affordable or comprehensive than Marketplace coverage. Medicaid, on average, costs less per person than private insurance and provides benefits that are more robust. Buy-ins could also create additional coverage options in counties with limited ACA Marketplace choices.
While these state-level public options present substantial opportunities, caution is key. Serious legal questions arise regarding waivers of provisions under both the ACA and the Medicaid Act that may be necessary to implement buy-ins. Further, buy-ins should be carefully crafted to meet specific, well-defined goals appropriate for the state. We propose three guardrails to protect affordability and benefits for enrollees, and costs to state Medicaid programs:
1. Medicaid buy-ins should not be used as a substitute for Medicaid expansion. Buy-ins as a substitute for Medicaid expansion implicate serious affordability concerns for low-income enrollees. A buy-in, by definition, contemplates imposing premiums on participants. Conversely, the Medicaid Act protects affordability by prohibiting premiums on individuals below 150 percent FPL and some populations may never be charged a premium, regardless of income level. For low-income enrollees, the premiums for a buy-in are simply terrible policy and create barriers to coverage. Thus, Medicaid expansion is the better path.
2. Buy-ins should not worsen covered benefits. First, individuals who could be eligible for Medicaid should be enrolled in Medicaid and always receive the benefits that they are entitled. Second, Marketplace enrollees who opt for a Medicaid buy-in should still receive a benefit package that meets the minimum coverage standards in the Marketplace, including all ten essential health benefits. Advocates should also consider state law requirements for Medicaid, and work to have those requirements applied to buy-ins (even when federal Medicaid funding is not implicated) to ensure that Medicaid protections and benefit requirements apply.
3. Medicaid should not subsidize insurance for non-Medicaid buy-in populations. Buy-ins have the potential to increase overall costs in Medicaid by, intentionally or not, altering the Medicaid risk pool (i.e. the group of individuals insured). In a managed care context, if the Medicaid buy-in population is more costly than the current Medicaid risk pool, it could increase the cost of insurance in that risk pool for everyone. This could in effect lead to Medicaid subsidizing health care for the buy-in population. Encouraging individuals with high needs to “use” Medicaid’s risk pool could lower the costs for private insurance while adding costs to Medicaid. To protect the integrity of current Medicaid programs, advocates should guard against proposals that risk using Medicaid as a de-facto high-risk pool.
Medicaid buy-ins are not a panacea for all that ails the Marketplace. They implicate serious concerns regarding affordability, benefits, and program integrity. However, if carefully designed, buy-ins could potentially provide a comprehensive and affordable choice in some geographic areas and for some populations. They are an option worth exploring.
For more analysis, see the National Health Law Program’s issue brief: “State Medicaid Buy-Ins: Implications for Low-Income Enrollees.”