The Medicaid program was established in 1965 as a partnership between states and the federal government to provide health coverage to low-income children, parents, the elderly, and individuals with disabilities. Forty five years later, the Affordable Care Act (ACA) expanded Medicaid to cover all individuals who live in or near poverty, regardless of age, family, or disability status. Today, the Medicaid expansion provides health coverage to more than 10 million low-income Americans, contributing to a health insurance coverage rate of over 90 percent nationwide.
Expanded health coverage through Medicaid is a major achievement for our nation, but that coverage expansion is not uniform. The 2015 Supreme Court decision National Federation of Independent Business v. Sebelius effectively made the Medicaid expansion optional for states. Thirty-one states and the District of Columbia have since expanded their Medicaid programs, while 18 states have not. In those states, an estimated five million people remain uninsured who could be covered by a Medicaid expansion.
The incoming administration and Congressional leaders have signaled a fondness for even greater state flexibility in Medicaid programs (though perhaps with significant caveats to federal funding). As states and the federal government jointly design Medicaid’s future, it will be important to incorporate what we have already learned about what works –and what does not. The findings from previous and ongoing Medicaid experiments can provide both lessons and cautions. Among the states that have expanded their Medicaid programs, there is variation. Six of the 31 expansion states received a waiver from the federal government to structure their programs differently from a traditional Medicaid program. These alternative expansions differ in significant ways from traditional Medicaid. They may:
- Require enrollees to pay premiums or other monthly payments
- Require enrollees to pay higher copayments than in traditional Medicaid
- Limit the benefits that enrollees receive
- Use incentives to encourage healthy behaviors
Cost-Sharing and Premiums in Medicaid
This variation among the states’ Medicaid structures creates an opportunity to study how the different features of a health insurance program may affect coverage, access, and affordability for low-income individuals and families. One recent study found that the alternative Medicaid expansion in Arkansas had similar success in increasing coverage rates as did the traditional Medicaid expansion in Kentucky. In contrast, the alterative Medicaid expansion in Indiana suffered low enrollment rates, with one third of individuals who are eligible never enrolling in the program. What accounts for this difference? The answer could be the monthly payments required of enrollees. While both Arkansas and Indiana collect monthly fees from Medicaid enrollees (as do Iowa, Michigan, and Montana), only Indiana and Montana terminate Medicaid enrollment for failure to pay.
It is not a surprise that low-income individuals forgo health insurance due to affordability issues. The famous RAND health insurance experiment showed this as early as the 1970s. Since then, multiple studies have reinforced and added to the literature showing that increases in health insurance fees reduce access to care and worsen health outcomes for low-income populations. Moreover, the addition of premium payments and other fees in health insurance programs for low-income families drives up administrative costs for states, who spend more money “collecting fees, tracking payments, sending notices, and administering non-payment penalties” than they take in.
As a result, many states have discontinued these efforts. Most recently, Arkansas stopped processing cost-sharing payments for the Medicaid expansion population with incomes below 100 percent of the federal poverty level, and expects to save millions as a result. Any future Medicaid changes that contemplate fees for enrollees should consider the lessons of the past 40 years.
Successful Enrollment Processes
Health coverage rates depend not only on eligibility levels and financial requirements, but also on enrollment processes. Complex, time-consuming, and burdensome processes are documented barriers to health insurance enrollment. Since at least the 1990s, states have experimented with strategies to ensure all eligible individuals and families sign up for Medicaid and the related Children’s Health Insurance Program (CHIP). Demonstrated successes from the past decade have included:
- Presumptive eligibility for children became an option for states in the late 1990s. Despite initial hesitations, states that implemented presumptive eligibility found that most families were successfully enrolled in Medicaid or CHIP following a presumptive eligibility determination.
- Pennsylvania was a pioneer of online applications, rolling out its COMPASS system in 2001.
- That same year, Louisiana began “ex parte” renewal, using information from other state programs to verify continued Medicaid eligibility where possible. As a result, the proportion of children who retained eligibility at renewal increased by 20 percent.
- In 2010, Massachusetts chose to verify income electronically rather than requiring Medicaid enrollees to complete paper forms. The state found improved accuracy in enrollment as well as administrative savings.
The ACA incorporated these lessons about these successful enrollment simplifications for Medicaid in conjunction with the law’s eligibility expansion. A recent survey highlights how system enhancements that streamline Medicaid enrollment—first tested in individual states—are now part of the routine administration of Medicaid programs in many states. As of January 2016:
- In 45 states, hospitals can use ‘presumptive eligibility’ to expedite access to care for children and adults while the regular Medicaid application is being processed
- Online and telephone applications are available in 49 states
- Thirty Four states use automated renewal processes that rely on available state data rather than requiring Medicaid enrollees to complete renewal paperwork
- All 50 states and the District of Columbia use electronic sources to verify applicants’ income
There are many opportunities for innovation within Medicaid, and state Medicaid programs are uniquely positioned to test policy reforms that lead toward the “Triple Aim” of better care, better population health, and lower costs. Entrepreneurial policymaking requires that we learn from previous state experiments. When we discover a successful intervention, we should strive to share it widely.
Similarly, when we learn that a particular policy element has failed to advance the Triple Aim goals, we should not repeat it, but should instead build alternative approaches from that hard-won knowledge. As a new federal administration takes the helm, federal policy should continue to provide the states flexibility for experimentation, and do so within a structure that builds on what we have learned to reinforce progress toward meeting the Triple Aim.