States are developing creative policy options to address the high cost of premiums for those purchasing coverage in the individual market. Given the inaction and lack of leadership at the federal level, states need to continue to move forward. Minnesota, of course, is leading the way.
Under a proposal introduced in the Minnesota state legislature earlier this year, Minnesotans shopping for health insurance on the individual market would have been able to purchase public coverage through MinnesotaCare, Minnesota’s Basic Health Plan (BHP). The public buy-in was supported by the Democratic-Farmer-Labor (DFL) Party Governor Mark Dayton and introduced by key DFL legislators (Senator Tony Lourey and Representative Clark Johnson), but it was not seriously considered by the Republican-controlled legislature.
Nevada’s Democratic state legislature also passed a Medicaid Buy-In bill which was subsequently vetoed by Republican Governor, Brian Sandoval. The Nevada Care Plan would have allowed Nevada’s uninsured to buy into Nevada’s Medicaid program, a current Medicaid expansion state. The buy-in plan would have been offered on the Health Insurance Marketplace, Nevada Health Link, and income-eligible applicants would access federal advanced premium tax credits (APTCs). These latter provisions were contingent on approval of a 1332 State Innovation Waiver.
These state buy-in proposals are really not too far out of the mainstream of viable policy options. Over the years, public program buy-ins have been used to target specific populations whose incomes fall just above program eligibility guidelines and where health insurance coverage is considered essential. Below, I present a few of these programs to highlight the well-established use of public buy-in programs to achieve state coverage goals. I also include additional detail on Minnesota’s public buy-in proposal and encourage additional discussion and debate about these and other state options to secure access to affordable coverage for all.
Medicaid Buy-In for People with Disabilities and Children
Most states already have at least one Medicaid buy-in program tailored specifically to the needs of people with disabilities. Medicaid allows states to offer coverage to adults with disabilities who earn more than would otherwise be allowed in order to keep their Medicaid coverage. The policy goal of the program was to provide opportunities for those with disabilities to work and retain their health insurance coverage. It allows the disabled to work in jobs that may not provide health insurance coverage, including part-time work, low-wage positions, and intermittent employment. Participants pay premiums based on a sliding fee scale, and states receive federal matching payments to help offset the costs of the program. As of December 2011, 44 states have implemented this program.
Similarly, the Family Opportunity Act of 2005 provides federal matching payments to states that offer Medicaid Buy-In coverage to children with disabilities and incomes below 300 percent of the federal poverty level (FPL). This bill was initially introduced by Representative Pete Sessions (R-Texas) in 2003 to honor a young child born with Down syndrome and a severe heart defect. The family was deemed ineligible for public coverage when the father accepted a bonus at work, raising his income above the eligibility levels. The goal of this Medicaid Buy-In option was to protect families from the need to become impoverished in order to receive Medicaid-covered services for their child with disabilities. To date, five states have implemented this program: Colorado, Iowa, Louisiana, North Dakota, and Texas.
Several states also use state funds only (i.e., no federal match) to allow families to buy-in to Children’s Health Insurance Program (CHIP) coverage. For example, Maine provides a Full Cost Purchase Option for Children under 19 Years of Age for families with incomes between 140 and 213 percent FPL and charges premiums on a sliding scale. Until 2014, New Jersey also offered a CHIP Buy-In for children with family incomes above 350 percent FPL who were not eligible for the subsidized New Jersey FamilyCare coverage.
Minnesota’s Public Buy-In: The Details
The drafters of the MinnesotaCare Buy-In thought through many of the details of how a public buy-in program would work. MinnesotaCare would offer two plans on Minnesota’s Health Insurance Marketplace, MNsure—a Silver plan that covers 70 percent of health care expenses—and a Gold plan that would cover 80 percent (i.e., 30 percent and 20 percent consumer cost sharing, respectively). Enrollees would pay the full cost of the premiums, so there would be no ongoing cost to the state after the program is set up.
If a federal 1332 State Innovation Waiver were secured, Minnesotans who purchase coverage through the public buy-in option would be eligible for federal premium tax credits offered through MNsure. Each health plan that currently contracts with the state of Minnesota to provide managed care services for Medicaid and the BHP would be required to offer at least one buy-in product on MNsure — either through its existing managed care contract or through a Medicaid Accountable Care Organization.
How the Public Buy-In Option Would Help in Minnesota
Key benefits of the MinnesotaCare buy-in include a lower-cost coverage option to compete with private plans on the Marketplace and increased access to coverage, particularly for areas with limited or no plan options. The buy-in would provide access to the broad network of physicians and care providers that are available through MinnesotaCare, ensuring that people could keep their local doctors and hospitals.
The concerns raised by health plans is that the low-cost public MinnesotaCare Buy-In would edge them out of the market with its significantly lower rates achieved through paying providers at the lower Medicaid payment rate. If everyone was allowed to purchase the buy-in plan, most would chose the lowest-cost plan. Private plans worry about being priced out of some markets completely through an unfair competitive advantage. Providers worry about the low Medicaid provider rates with additional concern about the willingness of providers to accept Medicaid enrollees or at least new enrollees.
Yet, given the uncertainty of health reform activity at the federal level, there is a real possibility that non-metro areas in Minnesota as well as in other states, now estimated at 38 of the 3,000 counties, will go without any health plan option in the non-group market. The buy-in plan could be limited to rating areas with one or fewer plan offerings and/or targeted to families where premiums exceeded more than 9 percent of their income (i.e., the current limit for federal tax credits). To encourage provider support and participation, the Minnesota legislation included a provision that for buy-in enrollees, providers would be paid 100 percent of Medicare payment rates.
Public Buy-In, Other Creative Solutions Must Be on the Table
State policy analysts have learned with the implementation of the Affordable Care Act that a one-size-fits-all policy did not work for states. Targeted and creative solutions, including a public program buy-in, should be considered in an effort to ensure affordable and accessible coverage. Waiting for Washington to act becomes a less viable strategy daily — states must develop innovative policy strategies of their own that align with their policy objectives and their unique health insurance markets. Minnesota is well situated to move forward with one such strategy by putting the MinnesotaCare buy-in back on the table and giving it a full opportunity for public debate.