Feds consider exchange option as part of Medicaid expansion deal

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Sen. Jonathan Dismang image
  • Sen. Jonathan Dismang

Sen. Jonathan Dismang image
  • Sen. Jonathan Dismang
Nice scoop this morning from Charlie Frago, who reports in this morning’s D-G (paywall) that Gov. Mike Beebe has asked the feds about giving folks between 100 and 138 of the federal poverty level (around $11,000 to $15,000 for an individual) the option to buy subsidized health insurance on the exchange if the state opts for full Medicaid expansion. The feds said maybe, which is noteworthy since the other compromise option — partial expansion — received a flat no. (Full expansion is up to 138 FPL.)

Is this a possible compromise option between full and partial expansion? First, let’s look at how this would work. Currently, the Affordable Care Act stipulates that the exchange is for people between 100-400 FPL who are not eligible for Medicaid. Thus, the 100-138 group would go to Medicaid under full expansion or to the exchange without expansion. Beebe’s proposal would give them the choice: buy private insurance with subsidized premiums around $20 a month or take Medicaid with no premiums.

Beebe’s request is a direct response to the ideas and arguments of Sen. Jonathan Dismang. Dismang wants folks in the 100-138 group (estimated to be more than 50,000 people) to have the option of buying insurance on the exchange because this would lead to potentially higher reimbursements to hospitals and, Dismang believes, people would prefer subsidized private insurance. He doesn’t say this out loud, but it would also lead to more profits for insurance companies.

Dismang's preference for the 100-138 group is different than what Beebe is proposing — he wants to keep them ineligible for Medicaid. But given that Dismang thinks that people would prefer to pay a little bit for private health insurance, what’s wrong with giving them the choice? The problem is that the idea that very low-income people would prefer to pay out of pocket is dubious.

I caught up with Dismang today and while he was happy that dialogue was ongoing, he said this proposal didn't fully address what he was after.

“What we were looking at was trying to control costs by limiting how many new enrollees we had in the Medicaid system [by making 100-138 ineligible], so it’s a little bit of a different take than we were going for,” he said. As for the idea that folks would opt for the exchange if given the choice, he said, “I believe that to be true. But at the same time I think some people would choose Medicaid and you’re setting yourself up for a great unknown. For the budgeting process, that doesn’t make things any easier.”

This is a little bit of a walk back from his previous argument, when he cast himself as a defender of the 100-138 group and their "right" to buy private health insurance. But at least he's honest — this was always about transferring costs from the state, which has to start paying 10 percent of Medicaid costs in 2020, to the feds, who pay for subsidies on the exchange.

It's possible that Ohio Gov. John Kasich, a Republican and fierce Obamacare critic who came out for expansion earlier this week, might be angling for a similar deal as Beebe. Reports indicated that the Obama administration told Kasich they would "consider" letting certain low-income folks opt for the exchange. Dismang is holding out hope that Kasich got an even better deal than that, telling me that he thinks Kasich is only "endorsing his type of expansion that’s been agreed to behind closed doors."

Maybe. But what's really striking about the Republican governors who've come out for expansion (now six after Michigan Gov. Rick Snyder's announcement today) is that they come to precisely the conclusion that Republican lawmakers resist. Yes, they still hate Obamacare. But these Republican administrations conclude that it saves hospitals, saves money and keeps them from losing out on federal tax money to other states. They've decided that it's just too good of a deal to say no.

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