States still considering whether or not to expand Medicaid are weighing fiscal considerations in their decisions. Fiscal aspects include enrollment projections, and the effect of Medicaid expansion on a state’s broader economy. Another key fiscal consideration is the effect of benefit design. States that choose to expand Medicaid have the flexibility to determine what benefits they will offer to the newly eligible population, and this decision has a direct impact on the overall cost of expanding the state’s Medicaid program.
The set of benefits offered to the new adult group (all non-elderly, non-pregnant adults with incomes at or below 138 percent FPL) is known as an Alternative Benefit Plan (ABP). These benefits can differ from those offered in traditional Medicaid, but they must be benchmarked to particular plans in the state and must cover all ten required Essential Health Benefits (EHBs)which are now required in non-grandfathered private insurance plans sold both on and off the exchange. ABPs must also comply with mental health parity and include non-emergency transportation, prescription drugs, and family planning benefits. In addition, for children and youth under age 21, states must ensure Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services are included. States can choose a different ABP for different groups of newly eligible individuals, or use the same plan for multiple groups. States are also able to use their traditional Medicaid benefits package as their ABP, as long as it provides coverage of these required services. Population demographics and cost are among some of the key factors states are examining as they determine what set of benefits is appropriate for newly eligible individuals.
Demographic data, including health characteristics, can help project how newly eligible individuals might utilize the health care system, what benefits they might need, and the associated costs. For example:
- A study of California’s newly eligible Medicaid population finds the group is mostly healthy, even though they now have limited access to care.
- In contrast, an analysis of the newly eligible individuals in Idaho found that this population is likely to have significant and chronic health conditions as well as prevalent mental health issues.
- An analysis from Colorado compared the newly eligible individuals to the general state population and found that the newly eligible individuals are younger, less educated, in worse health, and twice as likely to be currently uninsured compared with the general state population.
Research and analysis has helped states make decisions on the benefit package they plan to offer to the newly eligible. As two speakers discussed during a session at NASHP’s Annual State Health Policy Conference last week:
- Comparisons among demographic groups have assisted Colorado in predicting the usage and cost of health services and helped the state decide to model its ABP after the traditional Medicaid benefit package. The state is planning to collect data over the next few years to determine the best benefit package for the expansion population and will revisit the ABP selection at that time.
- New Mexico is planning to use its existing State Coverage Insurance (SCI) program as the foundation for the ABP, but will modify it to ensure the final benefit package for the expansion population includes all 10 EHBs.
Over the last several months, states have posted their research and analyses assessing their ABP options on State Refor(u)m. For example:
- The Washington Health Care Authority released a Medicaid expansion strawman proposal for the development of the ABP, which would be based on the standard Medicaid benefit package, and include additional preventive services, and habilitative services. The proposed ABP would also meet mental health parity.
- A report from New York examines four options for the state’s Medicaid ABP: (1) Medicaid, (2) Family Health Plus, which offers more restrictive long-term care and behavioral health benefits than traditional Medicaid, (3) multiple benchmark plans each for different sub-populations, and (4) commercial insurance.
- In Oregon, the state’s Medicaid Advisory Committee recommended the Oregon Health Plan (OHP) Plus as the state’s Medicaid ABP to minimize disruption for individuals that move among different OHP benefit packages within the Oregon Health Plan (OHP).
There are many questions states need to answer in deciding whether to expand Medicaid eligibility to the new adult group, and the cost and design of the benefit package for this population is just one of those questions. A new brief, authored by NASHP for the Robert Wood Johnson Foundation-funded State Network, goes more in depth on issues states are considering when making decisions on expanding Medicaid eligibility for 2014. The brief provides links to tools from states and national experts that states can use to inform their fiscal analyses as they consider the Medicaid expansion decision.
Let us know how your state is thinking about the Alternative Benefit Plan—share information in the Medicaid benefit design discussion or in a comment below.