Earlier this year, the Nevada legislature passed a bill that would allow all Nevadans to purchase a health care plan through Medicaid. This plan lacked major details and was ultimately vetoed, but it certainly warrants a look as to whether this would help Minnesota insure all its residents. Medicaid is a federal health care program passed in 1965 that insures low-income individuals and families. Medicaid also covers the long-term care for disabled and elderly people, as well as pregnant women.
Nevada’s plan stated that any uninsured person could purchase a plan through the state-run Medicaid program. This would allow those who don’t qualify for Medicaid but are still cost prohibited from purchasing health insurance on their own to gain more affordable health insurance. These people often decide that the risks of contracting an illness or getting sick are not worth the hundreds of dollars a month in premium costs (often as much as one thousand dollars a month for older Minnesotans).
When considering a Medicaid for all option, other uninsured populations could include those who legally reside in the U.S. but haven’t lived here long enough to qualify for other health insurance options; however, the largest uninsured group in the U.S. is undocumented immigrants, and they would remain uninsured. These plans would only be eligible for people who don’t have an employer-based plan, which includes everybody on the individual market (the largest group eligible and likely make the switch).
Having laid out the general idea, we will turn to examining how a Medicaid for all plan could work in Minnesota. The Medicaid buy-in would be eligible for all legal residents of Minnesota who are not already on a public insurance program like Medicare or Medical Assistance, or on a private insurance plan through their employer. 190,000 Minnesotans bought a plan on the individual market this year, while an additional 234,000 Minnesotans were uninsured in 2015 (the most recent publicly available data), which means 424,000 Minnesotans would be eligible for the buy-in.
Approximately 45,000 were uninsured children under 18, and 189,000 were adults between 19-64 years old. For those on the individual market, 10.6% are children, meaning approximately 20,000 children and 170,000 adults. In total, 65,000 Minnesota children and 359,000 adults would be eligible for the buy-in.
The buy-in would cover the traditional adult Medicaid benefit set (which includes the 10 essential health benefits outlined in the Affordable Care Act), but would not include the other services Medicaid traditionally covers for the disabled and seniors, namely long-term care and waivered services, as well as home- and community-based services. The plan would require a monthly deductible (as opposed to a yearly fine/deductible) to offset some of the costs.
The penalty for not having health insurance is $695 per adult in a household (with a maximum of $2,095), so the premium should be fairly close to that figure in order to incentivize its purchase. The Medicaid buy-in premium would have to be around $1,000 per year for adults ($83 per month), or $800 for a child, with a $67 premium, because a Minnesotan earning 201% of the poverty line (after tax credits) would pay a premium of $129 per month for a silver plan (which is the benchmark plan under the ACA).
Providers caring for public program enrollees in Minnesota are reimbursed at 71% of the rate Medicare pays insurers, which is about 10% higher than the national Medicaid reimbursement rates, according to Kaiser. These rates are not flat – they differ across ratings areas based on the health and age of the population; however, for the purposes of this analysis we will assume 71 percent. It is possible that the state would consider paying higher reimbursement rates to incentivize providers to serve more Medicaid patients, although that would slightly reduce the cost-effectiveness of the program.
The state costs would essentially depend on: 1) if these uninsured people need to contribute any money (buy in); 2) how much the federal government would contribute to these plans; and 3) what array of services the Medicaid buy-in would cover. Each of these could drastically change the state cost, so this analysis will now turn to the challenges and consequences of each factor. The next article in this series will examine these costs as they pertain to Minnesota.