As a Medicaid Expansion Tool, Premium Support Leaves Neediest People Sitting on the Sidelines Again

It is way too early to break out the champagne over the latest Medicaid expansion initiatives bubbling up around the nation. 

States that have been reluctant to expand traditional Medicaid are ablaze with proposals to offer “premium support” to expansion populations. 

Premium support programs may differ in their details, but they have one thing in common.  Instead of offering regular Medicaid to an expansion population, the state pays the cost of their private insurance premiums.

Kaiser Health News reported last week that the Department of Health and Human Services is encouraging states to explore this approach.  MSN featured some “let’s make a deal” offers on expansion by a number of GOP legislators.  And Health News Florida reported a wave of bipartisan enthusiasm for a Florida premium support proposal that was unveiled after support for traditional Medicaid expansion collapsed.

For policymakers who don’t like Medicaid but want the federal expansion dollars, the benefits are clear.  They can prop up the private insurance market as an alternative.  They can allow children and parents in Medicaid-eligible families to be covered by the same insurance.  And they can make the Medicaid program appear smaller to the naked eye.

But based on expert evaluations, the benefits of premium support may not be so clear for today’s expansion populations.

By the early part of the last decade, at least seventeen states had premium support programs in some form, according to a 2005 report of the State Health Access Data Assistance Center.    

And from the perspectives of the states running them, the programs had some problems.

There were significant upfront costs and administrative burdens, difficulties in enrolling families, and challenges in defining the roles of employers.  And they often had to be supplemented by regular Medicaid, in which “wrap-around” Medicaid benefits were offered to close the coverage gaps in traditional insurance products.

From the perspective of potential Medicaid recipients, there were also some significant challenges. 

Writing in Health Affairs in September 2005, Janet Mitchell, Susan Haber, and Sonja Hoover compared the regular Medicaid program in Oregon with a premium assistance program also offered by the state.

They found that the families enrolling in the premium assistance program:

• Were less likely to be of Hispanic origin;
• Were more likely to have at least one parent employed;
• Had higher levels of educational attainment;
• Had better health status;
• Were more likely to have had experience with private insurance programs; and
• Were more likely to receive care in a doctor’s office, as opposed to a community health center.

We can divide today’s expansion population into three groups – better educated parents of SCHIP children who have a medical home and place a premium on staying well; parents who use safety net services episodically only when they are sick; and childless, mostly single, adults with chronic conditions.

Based on the evaluations, only the first group is clearly helped by premium support – provided enrollment is encouraged and simplified.

The second group may be helped, but only if the states put additional resources into education and outreach.

As the Health Affairs authors put it:

“If premium subsidy programs are to be successful in enrolling low-income families, the results of our study suggest that these programs may need to be accompanied by efforts to educate these families about the importance of health insurance and how it works.”

The third group is one for whom premium support may be no answer at all – low-income, uninsured childless adults who have chronic conditions.  Up to 6.6 million people in the Medicaid expansion population have mental illnesses or addiction disorders.

They already often have so many strikes against them – no medical home, underemployment, no children receiving Medicaid or SCHIP benefits, and stigmatization by policymakers who equate illness with entitlement.

They don’t need insurance with all of its profit motives, administrative costs, and bureaucratic tangles.  Their providers just need someone to help pay the bills.

And states need the $20 to $40 billion Medicaid expansion would add to their revenues over the next five years if people with behavioral illnesses were added to the regular Medicaid program.

Premium support is better than nothing. 

It may ultimately win the blessing of HHS, and in some states premium support may be the only path to expansion. 

But premium support is only a partial expansion of the Medicaid program – a concept rejected by HHS just months ago. 

And this partial expansion will leave some of those most in need sitting on the sidelines again.  

To reach Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/