Medicaid health plans are critical to covering the uninsured

November 1, 2007

The important role of Medicaid health plans in states where landmark healthcare reform efforts are under way is highlighted in a new report, Medicaid Health Plans: A Turnkey Solution for Expanding Health Insurance Coverage for the Uninsured. Sponsored by the Association for Community Affiliated Plans (ACAP), the report focuses on health plans in California and Massachusetts – two states breaking ground in expanding coverage to uninsured residents.

The important role of Medicaid health plans in states where landmark healthcare reform efforts are under way is highlighted in a new report, Medicaid Health Plans: A Turnkey Solution for Expanding Health Insurance Coverage for the Uninsured. Sponsored by the Association for Community Affiliated Plans (ACAP), the report focuses on health plans in California and Massachusetts – two states breaking ground in expanding coverage to uninsured residents.

This timely paper demonstrates that expansion of Medicaid and SCHIP through Medicaid health plans is an effective way to cover the uninsured. Rather than subsidizing the purchase of commercial health insurance through tax credits or other incentives for low-income people, states are better served to cover low-income uninsured individuals by building on a platform of Medicaid managed care plans already operating in those states.

The report provides case studies that demonstrate how Massachusetts and several California counties capitalized on existing Medicaid health plans as "turnkey" solutions to quickly, efficiently and economically provide coverage to low- and moderate-income persons.

In the absence of state-level action to cover children ineligible for Medi-Cal or Healthy Families, several counties in California developed county-level children's health initiatives, usually referred to as "Healthy Kids" programs, to provide coverage directly to low-income children.

Massachusetts, like other states, does not cover certain low-income adults through the Medicaid program (particularly those who are neither parents nor disabled). However, Massachusetts, also like many other states, was able to leverage some federal funds to subsidize health care providers (in particular, public hospitals and other hospitals that serve a high number of uninsured persons) to help provide care for persons without insurance. Under the terms of an agreement with the federal Centers for Medicaid and Medicare Services (CMS), Massachusetts agreed to shift funds from directly subsidizing the hospitals that cared for the uninsured into a program that would subsidize coverage for the individuals who were uninsured. This approach would allow low-income persons to access primary and preventive care through a subsidized managed care program.

However, this approach jeopardized a significant amount of revenue for a number of safety net hospitals and health systems. To help these hospitals from a revenue standpoint, Massachusetts maintains a reduced "safety net pool" of funds to care for those uninsured not eligible for the new products. The legislation establishing Commonwealth Care specified that only Medicaid managed care organizations that have contracted with the Commonwealth of Massachusetts as of July 1, 2006 can deliver services under the program.

The health plans and purchasers interviewed for these case studies identified three specific operational areas in which purchasers can design programs that effectively leverage the experience and resources of existing Medicaid health plans: provider networks, health care operations, and outreach and enrollment.

They also described the benefit of a purchaser's decision to use Medicaid and SCHIP health plans to provide coverage in a healthcare expansion program: the ability to provide continuity of care for persons moving among public programs due to income fluctuations, and to cover children in a family who may qualify for different programs due to age or citizenship status.

"These plans have a wealth of experience serving the particular health and social needs of low-income people because they also serve Medicaid and the State Children's Health Insurance Program," said Darnell Dent, CEO of Community Health Plan in Seattle, and chairman of ACAP. "Medicaid health plans are better able to provide continuity of care – especially to patients who traditionally churn on and off the Medicaid rolls – as well as more effectively serve families who have other members on Medicaid."

Margaret Murray is CEO, Association for Community Affiliated Plans. The Association for Community Affiliated Plans is a national trade organization representing 33 non-profit safety net health plans.