Exchanges

Medicaid and Other Payers

For Medicaid and CHIP, the creation of exchange coverage under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), will create new market dynamics with potentially wide-ranging effects on individuals, providers, and health plans, as well as on states and the federal government. Several of these new interactions between the exchanges and public programs, including Medicaid and CHIP, are described below.

Churning

Relatively small changes in income may lead to eligibility changes, resulting in coverage shifting between Medicaid, CHIP, exchanges, and uninsurance, a phenomenon known as churning. Churning may disrupt care by requiring individuals to change providers. Likewise, individuals who churn from Medicaid to exchange coverage may need to adjust to paying different, and typically higher, premiums and cost sharing. Providers may find it difficult to continue to treat patients who move in and out of their networks. Health plans, states, and the federal government may find churning to be administratively burdensome as they process disenrollments and reenrollments throughout the year.

MACPAC’s analyses indicate that there are significant intra-year income changes among adults under age 65, moving from below to above 138 percent of the federal poverty level (FPL), affecting their eligibility for Medicaid. To help mitigate the effect of churning, MACPAC has recommended that Congress create a state option to allow 12-month continuous eligibility for adults enrolled in Medicaid, an option already available for children.

Learn more about churning by reading MACPAC’s 2013 report chapter, Eligibility Issues in Medicaid and CHIP: Interactions with the ACA. A followup 2014 report chapter presents further analyses and recommendations to reduce churning and promote continuity of Medicaid coverage among adults under age 65.

Churning among pregnant women

Medicaid has long played an important role in financing health care for low-income pregnant women, and all states are required to provide pregnancy-related care for women below 138 percent FPL, or higher in some states (referred to as the mandatory poverty-related pregnancy pathway).

The period of coverage for women eligible for Medicaid on the basis of pregnancy is limited to the duration of the pregnancy and 60 days postpartum. This limitation creates transitional issues for enrollees as they move between different sources of coverage.

Additionally, states are not required to provide full Medicaid benefits for women covered through poverty-level pregnancy pathways and may limit services to those related to pregnancy. Medicaid eligibility generally makes individuals ineligible for exchange subsidies, but there is an exception for women who are not provided with the full Medicaid benefit package. As such, women in some states may be simultaneously eligible for Medicaid and exchange coverage.

In its March 2014 report, the Commission looked in depth at the challenges resulting from overlapping Medicaid and exchange eligibility for pregnant women, in part related to variation across states in Medicaid-covered benefits.  The Commission made two recommendations focused on reducing inequities for pregnant women in Medicaid-covered benefits as well as mitigating the impact of potential churning between Medicaid and exchange plans. Federal guidance has since clarified the options available to pregnant women. As a result, the coverage options available to most women depend on a woman’s existing coverage, whether she is pregnant at the time of enrollment, and the time of year at which she seeks coverage, although additional options may be available to women in a handful of states. A June 2016 issue brief  reviews the issues that led to the Commission’s 2014 recommendations and provides further details on the updated guidance and Secretary-approved minimum essential coverage determinations.

Premium assistance waivers

Premium assistance, or the state purchase of private market plans on behalf of Medicaid enrollees, is attracting interest as an alternative to expanding traditional Medicaid coverage to previously ineligible low-income adults. After the U.S. Supreme Court ruling in June 2012 effectively made Medicaid expansion to the new adult group an option for states, two of the states expanding have taken this approach. Through Section 1115 research and demonstration waivers, four states are providing Medicaid coverage to the new adult group through some form of premium assistance (MACPAC 2017a). In Arkansas and New Hampshire, adults are mandatorily enrolled in premium assistance through an exchange or employer-sponsored plan. In Indiana, an employer-sponsored insurance premium assistance component is optional for all new adult group enrollees over the age of 21 who have access to cost-effective employer-sponsored insurance. Beginning in 2018, adults in Michigan with income between 100 percent and 138 percent of the federal poverty level will have the choice of enrolling in an exchange plan or fulfilling a healthy behavior requirement and enrolling the state’s Medicaid managed care program.

While the premium assistance approach is not new to Medicaid, it previously has served a relatively small number of enrollees, with most programs covering fewer than 2,000 people and primarily those with employer-sponsored coverage (GAO 2010). The extension of premium assistance to the purchase of exchange plans raises a number of considerations for the program.

To learn more about these waivers, see MACPAC’s March 2015 report chapter, Premium Assistance: Medicaid’s Expanding Role in the Private Insurance Market.

CHIP

MACPAC has also examined the extent to which children now enrolled in CHIP would shift to other sources of coverage, including exchange coverage if federal CHIP funding comes to an end. MACPAC’s analysis has found that CHIP is more affordable and provides more generous benefits than exchange coverage. These findings, together with uncertainty of the exchange coverage market, led to the January 2017 Commission’s recommendation to extend CHIP funding for five years through fiscal year 2022. Learn more by reading our previous chapters from June 2014March 2015, and March 2016 on this issue.