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Several states are developing market-oriented approaches for expanding access to medical insurance.
Thursday, October 17, 2013
Virginia isn’t the only state wrestling with whether to participate in an expansion of the Medicaid program. Some of the ideas being generated elsewhere are worth considering as the commonwealth’s leaders look for an avenue to solve their health care challenges in a way that best fits the needs of their constituents.
The U.S. Supreme Court ruled that states can decide whether to broaden eligibility for Medicaid, which now covers medical care for low-income children, the disabled and elderly nursing home residents. Whether or not states opt in, federal payments to hospitals for charitable care will be cut under the theory that fewer uninsured people are seeking services in emergency rooms. Carilion Clinic has estimated that it could lose up to $15 million a year if Virginia declines to participate. Further, even if the commonwealth waives claim to the $23 billion in federal funding available, state taxpayers will still help to foot the bill for the program elsewhere. So far, 24 states have signed up.
A handful of states with reservations about the long-term viability of the expansion, similar to those being voiced by opponents in Virginia, have taken the initiative to develop their own proposals for achieving the larger goal, improving access and efficiency of medical care.
Michigan has proposed a gradual transition from Medicaid to private insurance for new enrollees, who would be given the choice to buy insurance through the marketplace after 49 months or remain on the government program and shoulder a higher percentage of their own costs. Michigan also wants to use health savings accounts to help individuals manage expenses.
Arkansas has received federal approval for its market-based approach, allowing it to collect federal resources while using a model that is less government-oriented and more business-oriented. The state’s Democratic governor and Republican legislature agreed to a system in which newly eligible individuals will shop for and buy private insurance on web-based exchanges, with federal funding to cover premiums. In doing so, state leaders hope that enrollees will have access to a wider network of providers. Iowa is working on a similar model.
Some of these ideas could translate well in Virginia. Indeed, the commonwealth is ahead of most states in its use of managed care for 700,000 existing Medicaid patients, making market-based variations simpler to implement.
Questions remain about how these various proposals would work. The Congressional Budget Office has predicted that private insurance options would cost more, $9,000 rather than $6,000 per person, because Medicaid pays lower reimbursements to providers. But federal officials have said they believe Arkansas’ plan would be budget neutral.
Virginia legislators should invite representatives from these states to explain what they are trying to do, and determine whether some of those ideas could be adopted here.
The existing health care system is deeply flawed, and new federal reforms will not bring perfection. But doing nothing is the worst alternative available to Virginia. While straightforward expansion of Medicaid would be the simplest course, there may be other, practical ways to move forward toward a system that will work for health care providers, communities and all Virginians.
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