3 Solutions for High-Cost Payer-Coverage for Low-Income People

November 25, 2020 - Healthcare coverage remains out of reach for many low-income Americans due to cost, but three innovative solutions for Connecticut might shed light on how to bolster payer coverage affordability, a recent report commissioned by the Connecticut Health Foundation revealed.

Thirteen percent of Connecticut’s residents fall between 100 percent and 200 percent of the federal poverty level. Around 48,000 of those individuals are uninsured.

“The high level of uninsurance among people between 100% and 200% of poverty is generally not the result of a lack of coverage options, but rather a lack of affordable coverage choices for people above Medicaid eligibility levels,” the researchers asserted.

For example, at 200 percent of the federal poverty level, an individual making around $25,520 in pre-tax income would spend on average 22 percent of their yearly income on premium and deductible payments.

The state has three potential solutions to rectify this and extend access to coverage to the low-income population. Connecticut Health Foundation, a private, independent health equity foundation, commissioned the report from Manatt Health.

First, Connecticut could expand its Medicaid-eligible population.

There are a number of ways in which Connecticut could expand Medicaid eligibility to capture more of the currently ineligible, low-income population that struggles to find affordable coverage. For instance, the state could increase eligibility for childless adults to the same level as parents.

A major incentive for this approach is that the federal government would cover half of beneficiary healthcare spending under Medicaid. The proposal could also streamline coverage for low-income families and increase coverage statewide.

However, Medicaid eligibility would make the new population of beneficiaries ineligible for subsidized coverage on the state’s Affordable Care Act marketplace. Additionally, providers could lose revenue if more individuals switch from the marketplace to Medicaid.

Connecticut’s Medicaid program is more affordable for patients than its Affordable Care Act marketplace health plans. But this could cause some Affordable Care Act marketplace enrollees to become ineligible for their marketplace plans.

More modeling is necessary to provide more accurate predictions as to this solution’s impact on Connecticut’s healthcare stakeholders.

Second, Connecticut could offer more subsidies on the Affordable Care Act exchange. This might make Affordable Care Act exchange health plans more attractive to eligible individuals who previously avoided these plans due to price.

While federal funding supplies a certain amount for Affordable Care Act marketplace subsidies, states can add on to that amount with their own funds. The state decides how much it will add to the federal subsidies and what groups would be eligible for the additional support. It would also have flexibility to adjust these subsidy levels each year.

The state could also apply for federal funding, but that would require a federal waiver and for the federal government to green light the waiver, which could take some time. In contrast, using state funds, Connecticut would not have to receive federal approval.

Massachusetts and Vermont have taken this approach, the report noted. Massachusetts reduced premiums by $40 and saw a 14 to 24 percent increase in enrollment, particularly visible among low-income individuals.

This approach would also fortify the Affordable Care Act marketplace’s pool of healthy enrollees.

The solution might lead to higher revenue for providers, should lower premiums, and attract uninsured individuals to enroll thereby reducing uncompensated care.

Increasing state contribution toward subsidies would be more costly for Connecticut than expanding the Medicaid population, the researchers noted.

A third solution would be fusing the two approaches by expanding Medicaid eligibility for some low-income groups and offering higher subsidies to those who do not qualify for Medicaid expansion.

Previously, state policymakers considered creating a public option to solve the lack of affordable coverage. However, the movement toward this solution failed. Many blame Cigna and other payers for the failure of the public option proposals.

As low-income residents across the nation struggle to access coverage due to healthcare costs, these three strategies may indicate a path forward.