Health Care Buy-In Proposals Address Costs Of Coverage

By Susan Rupe InsuranceNewsNet

Some call it a “Medicaid Buy-In.” Others call it a “public option.” Proposals to launch this health care program have been launched on the federal level, as well as in a few states.

Lawmakers are proposing legislation to stabilize the Affordable Care Act insurance market, make coverage more affordable for consumers, and improve access to care by leveraging the bargaining power and administrative savings of public programs. These programs vary in their design, depending on policy priorities and the market environment in which they are being implemented.

Buy-in programs can be offered through private plans, such as Medicare Advantage or Medicaid managed care plans, or through direct arrangements between the government and health care providers. Manatt Health examined these federally-sponsored and state-sponsored buy-in and public option models.

Medicare At 50

House and Senate Democrats introduced the “Medicare at 50 Act” in February. The bill would expand Medicare by allowing individuals ages 50–64 to “buy in” to the program. Enrollees would be able to purchase coverage on the marketplace using ACA tax credits and cost-sharing subsidies, with premiums calculated to prevent financial risk to the existing Medicare program.

Soon after its introduction, the bill garnered over a dozen cosponsors, but its passage in the Republican-held Senate remains unlikely, Manatt said.

In addition, Sen. Brian Schatz, D-Hawaii, and Sen. Ben Ray Lujan, D-NM, reintroduced the State Public Option Act in February. The bill would extend ACA premium and cost-sharing subsidies to buy-in and public option plans developed by individual states.

It also would provide federal match funding for state costs for administering the program (over and above premium and cost-sharing payments that the state collects)—as well as increased primary care provider payments in the Medicaid program nationwide.

Manatt described this as an example of how federal legislation could support state-based innovation with additional authority or funding. Similar collaboration may be a pragmatic way to move government-sponsored health reforms in the short term and may be an example for future national reform, Manatt analysts said.

States Looking At Buy-In

Four states have completed their studies of state-sponsored coverage options that leverage state programs, such as Medicaid, the Basic Health Program and state employee health plans, to offer new, affordable coverage options. Those states are Delaware, Massachusetts, New Mexico and Oregon.

In addition, legislation authorizing further study or implementation of state-sponsored options has been introduced in 10 states so far this year.

How do these buy-in plans compare with single-payer proposals such as Medicare For All, which would provide coverage for all individuals in the U.S.? “Medicare For All” and other single-payer proposals share some of the same goals and characteristics of buy-in programs. However, they ultimately envision replacing current sources of coverage with one overarching financial system for the entire country or state. In contrast, buy-in programs seek to offer an additional coverage option to consumers.

Manatt studied only buy-in proposals and not single-payer proposals.

Policymakers who want to move forward with buy-in proposals are motivated to expand affordable coverage, lowering the uninsured rate, and addressing consumer concerns over high-premiums, deductibles and copays. In addition, consumers are facing fewer choices in obtaining coverage, Manatt reported, with more than one-third of all counties across the nation having only one health insurer participating in the marketplace.

However, a buy-in proposal is not the only option to reform the ACA, Manatt analysts said. Other possible reforms include setting a state individual mandate, “tying” insurer participation across markets (e.g., by requiring insurers who offer state employee health plans or Medicaid coverage to participate in the individual market), enhancing risk adjustment programs, capping provider rates, and providing supplemental state-funded premium subsidies or deductible “wraparound” payments to consumers.

Throwing a buy-in proposal into the health care mix would have two benefits to consumers, Manatt researchers said. One would be increased competition by introducing a new, lower-cost coverage option to an insurance market and would, in theory, drive down costs.

The other would be improving the individual market risk pool by attracting enrollees with a better risk profile than that of current individual market enrollees. For example, a buy-in program that is offered on the marketplace and in the individual market risk pool and attracts healthy consumers who were previously uninsured would improve the entire individual market risk pool and could lower costs as a result.

Types Of Buy-In Models

Federal: Manatt looked at two types of Medicare buy-in: (1) a Medicare buy-in that would allow targeted populations to purchase Medicare coverage, and (2) a Medicare “public option” that would create a new coverage option that uses the Medicare infrastructure and is available to a broader population.

A targeted Medicare buy-in would offer Medicare or Medicare-like coverage to a new eligibility group - such as individuals aged 50 to 64 years, individuals in particular industries or regions, or other defined groups. The goal is to provide certain populations with an opportunity to enroll in a new, stable and lower-cost coverage option. A targeted Medicare-based buy-in could also be designed to improve the health risk of existing insurance markets, for example, by attracting the older populations currently purchasing coverage on the individual markets to Medicare buy-in coverage. Making the marketplaces more attractive to healthy individuals, particularly those under 30 years of age, is a key goal for many stakeholders.

A Medicare-based public option would entail the Center for Medicare & Medicaid Services offering a public option that operates as a qualified health plan on the marketplace, but leverages Medicare’s administration. This would involve offering coverage that is part of the individual market risk pool and would be available to all consumers purchasing on the marketplace.

State-Sponsored: Two Medicaid buy-in models are emerging the states so far. One is a more “traditional” state Medicaid buy-in, where the state makes some form of Medicaid-like coverage available to individuals who are not eligible for Medicaid. The other is a state-sponsored health plan, or “public option,” that builds from the Medicaid program.

In a Medicaid buy-in, the state allows consumers who are not eligible for Medicaid —for example, individuals whose income is higher than Medicaid eligibility levels but who find coverage unaffordable, or individuals who would be eligible for Medicaid if not for their immigration status — to purchase Medicaid-like coverage.

In a Medicaid public option, the state offers a new, state-sponsored coverage option on the marketplace that operates as a qualified health plan, meeting federal and state benefit and rating requirements.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.