- Convincing more Medicaid insurers to sell plans in Affordable Care Act marketplaces could drive down premiums for consumers, according to a new report prepared by the Urban Institute.
- In the 10 states with the lowest average benchmark premiums, all have Medicaid managed care organizations offering state-wide marketplace coverage. In contrast, the 15 states where premiums are higher than the national average have no MMCOs offering marketplace coverage or have very limited MMCO participation.
- The researchers suggest policy changes could reduce constraints on Medicaid insurers and increase participation in new Medicaid buy-in programs on ACA exchanges.
The number of insurers participating in ACA markets has been steadily declining in recent years, leaving consumers facing rising premiums and fewer plans from which to choose. In 2017, three or fewer payers held 80% of the individual ACA market in at least 46 state exchanges, according to an updated Government Accountability Office report. A similar degree of concentration was seen in the small group market in 42 exchanges.
The shrinking pool of insurers puts many consumers in a tough spot — they either risk going uninsured or face high premiums for less coverage. A Gallup poll released earlier this year found the uninsured rate hit 13.7% in the 2018 fourth quarter, its highest point since the individual mandate took effect in 2014. A separate GAO report from January showed insurers anticipating more premium hikes to cover rising costs of care as well as removing certain ACA initiatives meant to reduce consumer risk and offer subsidies.
“As policymakers grapple with affordable ways to expand coverage, they may consider ways to incentivize Medicaid insurers to expand their offerings,” Mona Shah, senior program officer at the Robert Wood Johnson Foundation, which helped fund the report, said in a statement. “If Medicaid managed care plans offer coverage to more people and in more places, it could help protect consumers from higher healthcare costs.”
Getting more Medicaid insurers to sell marketplace plans could help lower premiums, but the report — which draws on interviews with MMCO leaders — illustrates why some insurers are reluctant to enter the ACA markets.
Some MMCO providers said it’s easier to participate in the Medicaid program directly than in the marketplaces. Some MMCO providers said the Medicaid program had more stability and less financial risk, more clearly defined rules and less burdensome requirements than the ACA marketplace. The need to compete for enrollees also dissuaded some Medicaid insurers from participating in the ACA marketplace, the report said. Some MMCOs also reported worries about marketing and pricing demands of the exchanges.
But the MMCOs were more positive about Medicaid buy-in programs, which would let them add new enrollees without having to become actual marketplace insurers.
The report describes three types of Medicaid buy-in programs. In one type, the program functions as a separate program, using Medicaid fee-for-service or MMCOs to cover more individuals who don’t meet Medicaid eligibility criteria. A second option, available in New Jersey, allows Medicaid payers to offer coverage in the ACA marketplace. In a third hybrid scheme, offered in Oregon, Medicaid insurers administer plans that are funded by ACA premiums and individual mandate fees.
For Medicaid insurers, these programs offer new opportunities for enrollment and flexibility in how can can be covered. But while insurers reported liking the idea they could retain members for an entire year regardless of shifts in their personal income, they also tend to stick to what’s most familiar.
“Our findings suggest that the closer Medicaid buy-in proposals hew to Medicaid program rules, the more likely that Medicaid insurers would participate in such programs,” according to the report.