In the full-speed ahead Republican battle against Obamacare's expansion of Medicaid, some GOP-heavy states have taken an off-ramp straight into their own version of Frankenstein's laboratory. There, states have taken the Medicaid program, tinkered with it, and added enough ancillary parts to expand the program while still trying to appease the party base. Not an easy task, as regardless of the finished product, some villagers will always be carrying torches.
Arkansas, Iowa, and Michigan have expanded Medicaid in their own way under the Affordable Care Act through expansion waivers approved by the Centers for Medicare & Medicaid Services, while New Hampshire, Indiana, and Pennsylvania are pursuing waivers as well. Each state has taken Medicaid and added new parts, be it a limitation on transportation benefits, new cost-sharing requirements for the expansion population, or wellness incentives. One of the more closely watched additions is the implementation of dedicated health accounts, which function similarly to health savings accounts found in consumer-driven health plans.
Arkansas, with a GOP-controlled legislature and a Democratic governor, was the first to emerge from the lab with a Medicaid expansion deal, known as the private option. The deal gave Arkansas the ability to use federal premium assistance to purchase coverage for eligible Medicaid beneficiaries through the state insurance exchange. Now Arkansas is heading back to the table and looking to add new parts to its plan most notably, a move toward dedicated health accounts. Michigan rolled out such accounts in April 2014 with its waiver, while Indiana's pending waiver prominently features these accounts.
In Arkansas, new proposal (which still must meet CMS approval), beneficiaries with incomes between 50 percent and 138 percent of the federal poverty level would be required to provide monthly contributions to an account, averaging between $5 and $25, depending on income. The accounts would be used to cover the program's copays and cost-sharing requirements, and for each month a beneficiary contributed to his account, the state would kick in $15. Arkansas plans to keep track of the debt for beneficiaries who fail to pay, but of course putting the policy on paper and putting it into action are two different things. If a beneficiary doesn't contribute, the federal government wouldn't allow Arkansas to deny coverage.
Arkansas should get the OK to establish the accounts, which are already in play in Michigan. There, however, only those between 100 percent and 138 percent of FPL are impacted, with a requirement to contribute 2 percent of their annual income into such accounts on a monthly basis. In Michigan, beneficiaries have a chance to lower cost-sharing amounts, such as copays, by hitting certain health targets, so the hope is beneficiaries could build up some funds over time, and then use these funds to become better healthcare consumers. Making this policy apply to those earning as low as 50 percent of FPL, however, will be a hurdle that CMS may not let Arkansas cross.
As for Indiana, led by Republican Gov. Mike Pence, the state has requested an ambitious waiver that would rely heavily on these health accounts, with a plan in place for noncompliance. Gov. Pence is creating two plans. Healthy Indiana Plus and Basic. Under the Plus offering, required for beneficiaries earning between 100 percent and 138 percent of FPL, members would make a monthly contribution to a dedicated health account. Dependent on income, the monthly contribution would likely be between $3 and $25. Healthy Indiana Plus also would include an enhanced benefit package with dental and vision; since dental benefits are not offered to adults in many traditional Medicaid benefit packages, the Plus option is an attractive feature to go with the financial requirement. Those in that income bracket who are unable to make their contributions (with a 60-day grace period) would lose access to the program for a six-month lock-out period a provision that CMS will likely look to strike from the proposal.
The Basic plan, designed for those with incomes below the poverty level, would not require financial contributions to a health account. While HIP Basic is designed to provide all essential health benefits, it would not cover vision or dental care; it would also provide a less-generous pharmacy benefit and require copays for all services. It is Indiana's way of saying it pays to contribute to the health account.
So, with some contending the consumer-engagement approach has had mixed results in the employer-sponsored world, how will this approach translate to the Medicaid population. That is a question conservative states are determined to have answered. How much leeway the federal government grants, however, will be another matter.
Follow Ric Gross on Twitter @RicGrossDRG.