The federal health reform law is meant to expand health insurance coverage, but some advocates worry that it could inadvertently leave some low-income adults in Connecticut worse off.
They want the state to take action now to ensure that doesn’t happen, but that idea has critics, including, for now, the Malloy administration.
Beginning in 2014, states will be required to provide Medicaid coverage to adults earning up to 133 percent of the poverty level. Those just above the Medicaid income threshold will receive federal tax credits to buy insurance through the exchange, a marketplace that will be created for purchasing coverage.
For some poor adults in Connecticut, the Medicaid expansion will provide access to free government-funded insurance for the first time. But Connecticut already provides Medicaid coverage to some adults–an estimated 16,000 in the HUSKY program for low-income children and parents–at higher income levels than the federal law requires. Some advocates worry that health reform will lead the state to shift them from free Medicaid coverage to private insurance that, even with federal subsidies the law provides, could come with out-of-pocket costs.
“Connecticut, unlike many states, already covers a segment of low- or near-low income families as a result of HUSKY,” said Sharon Langer, a senior policy fellow at Connecticut Voices for Children. “We’ve done the right thing for a lot of years and so the concern is that inadvertently we could go backward. The concern is that if the adults in those families go into the exchange that they may not be able to afford health care coverage that they’re currently accessing.”
Nothing in the federal law stops the state from continuing to offer Medicaid to adults at higher-than-required income levels. The state would get reimbursed for roughly 50 percent of the cost of covering them, as it typically does. But some question whether the state will continue to foot the bill when there’s another way for them to get coverage at no cost to the state.
“From a fiscal perspective, it’s hard for a state to say we’re going to continue paying 50 percent when we could let them go into the exchange and they would get 100 percent” federally funded premium credits in the exchange, said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
Langer and other advocates want the state to take another option. The health reform law allows each state to create its own plan–known as a basic health program–to cover adults earning between 133 percent and 200 percent of the poverty level. Instead of giving those residents tax credits to buy coverage on the exchange, the federal government would pay the state 95 percent of what it would have spent on tax credits and subsidies for them.
If Connecticut offered a basic health program, it could cover about 16,000 adults who are currently covered by HUSKY but earn more than 133 percent of the poverty level, and 41,000 other adults, according to an analysis Massachusetts Institute of Technology economist Jonathan Gruber performed as part of the development of SustiNet, a proposed state-run health insurance plan. He projected that the federal funding would likely exceed the state’s cost of covering those adults.
Attempts to get the state to commit to the basic health program have been included in several pieces of legislation this year. One of the proposed bills to create the exchange calls for offering a basic health program, and another bill that would require the state Department of Social Services to create a basic health program passed the Human Services Committee last week. The SustiNet proposal also includes a basic health program.
Supporters, including Human Services Committee Co-Chairman Rep. Peter Tercyak, D-New Britain, say it’s important to get the plan into law now so the state will have time to develop it.
But not everyone embraces the idea, or the sense of urgency. Hospitals have opposed the proposal and have urged the state to allow low-income residents to buy coverage through the exchange, possibly with state funding to cover any out-of-pocket costs residents face. Government insurance plans tend to pay health care providers significantly lower rates than private insurance, so the type of plan low-income adults get could have significant financial ramifications for hospitals.
Kim Hostetler, vice president for administration and communications at the Connecticut Hospital Association, said the state already faces challenges paying for people in its health care programs.
“And this would be putting a whole new crop of people on a quasi-government program,” she said.
Malloy administration officials, meanwhile, say it’s too soon to make a decision on the program.
Jeannette DeJesús, special advisor to the governor on health care reform, said the basic health program merits serious consideration, but she said the U.S. Department of Health and Human Services has advised against taking action on it until they provide more guidance on the program. Among the unknowns are what benefits the program would be required to offer and how much federal money the state would get to run it. While some aspects of health reform need to be addressed now, like creating the exchange, DeJesús said decisions about whether to offer a basic health program can be made later, when more information is available.
“There is no federal reason or legislative reason or economic reason for us to stipulate in legislation now that we are going to have a basic health program,” she said. “There’s just absolutely no advantage to that at all.”
DeJesús said the administration cares very much about the adults just above the required Medicaid threshold, which she said is a vulnerable group that can suffer disproportionately from not having insurance.
“There isn’t a single thing that we can put into legislation now that we couldn’t put into legislation in six months or eight months or 10 months that would make any difference for this population, none at all,” she said.
Solomon said states interested in the basic health program should be doing analyses to see how it would affect the Medicaid program and other health insurance options that will be available in 2014.
Most of the states that are considering basic health programs are those that, like Connecticut, offer Medicaid coverage beyond what health reform requires, she said.
Solomon said the program is a good option for states to consider, and could offer more affordable, comprehensive coverage to low-income adults. It could also help avoid disruptions that occur when people move back and forth across the Medicaid eligibility threshold, and could allow parents of children covered by Medicaid to be in the same program as their kids.
In addition, Solomon said, people who receive subsidies to buy coverage through the exchanges could end up having to pay money back to the federal government if their incomes are higher than expected. The basic health program would allow some people to avoid that possibility.
“I think it makes sense to say this is something that we want to look at, we want to understand how it would work for people,” she said. “But I don’t think you need to say today you’re going to do it.”