Mississippi Senate leaders point to one component of the federal Affordable Care Act health care law as a reason not to expand Medicaid to provide health care coverage to the working poor.
The Senate has passed legislation to allow only those earning less than 100% of the federal poverty level (about $15,000 annually for an individual) and who are working to be covered by Medicaid.
A state House plan would provide Medicaid coverage to those earning up to 138% of the federal poverty level (about $20,000 annually) as is allowed under the Patient Protection and Affordable Care Act, also known as Obamacare.
House and Senate leaders are expected to begin negotiations in the coming days in an attempt to work out the differences between the two chambers.
One reason Senate leaders give for not expanding to provide Medicaid coverage to those earning between 100% and 138% of the federal poverty level is that people who fall into that income category can obtain private insurance through another component of the ACA – the Affordable Care Act Marketplace or “exchange.” People can receive private insurance through the exchange and receive federal help to pay for the policy.
“We want to keep more people on the exchange. The reimbursements (to health care providers) are better,” through the exchange than through Medicaid, said Senate Medicaid Chairman Kevin Blackwell, R-Southaven. “A lot of the argument for expansion has been to help the hospitals. Well, if you are going to take the people who currently have commercial insurance and put them on Medicaid, you just killed your hospitals.”
While the exchange policies assist people who otherwise would not have access to health care coverage, the problem, according to Mississippi hospital officials, is that they often lose money when treating low income people who have the marketplace coverage.
“The bottom line is that Medicaid reimburses at a higher rate,” said Lee McCall, chief executive officer of Neshoba General Hospital in Philadelphia. He said there are some private insurance policies that pay Mississippi hospitals a better reimbursement rate, but not the marketplace plans.
“Most of those marketplace plans, I kind of call catastrophic coverage … ,” McCall said. “For the most part the deductibles are so high many people cannot afford to pay them.”
Kim Hoover, interim chief executive officer of the Mississippi Hospital Association, said Medicaid actually pays state hospitals at the commercial rate – or at the same rate paid by private insurance companies.
Gov. Tate Reeves’ Division of Medicaid got approval from federal Medicaid officials to pay at that higher rate last year. The state’s hospitals agreed to pay the local matching funds needed to draw down the additional Medicaid dollars to pay at the commercial rate.
With the better rate the hospitals now receive from Medicaid, Hoover said, “The main difference between the two is the typically high deductibles for hospital services on the exchange plans. If the patient deductible isn’t paid, then the plan doesn’t pay the hospital the full payment. By comparison, Medicaid patients have no deductible.
“No deductible combined with the commercial rate means that Medicaid is typically better for providers and patients than the exchange plans,” Hoover continued.
Hoover cited an example of “a 54-year-old male in Hinds County making $17,000 a year could pay a monthly premium of $16.85 with a deductible of $6,350 for one of the exchange plans. In this case, the deductible is over 33% of the person’s pre-tax income. Recently, Mississippi led the nation in medical debt bankruptcies. Medicaid expansion would better protect these patients from medical debt.”
Granted, thanks to changes made to the exchange during the pandemic, low income people can get a policy better than what Hoover described. With federal help people between 100% and 138% of the federal poverty level can get a plan with little or no monthly premiums. But there are still out of pocket costs or deductibles for the policyholder on the marketplace plans, though currently less than the amount cited by Hoover.
For instance, on the federal HealthCare.gov website where Mississippians would go to obtain a marketplace plan, a 40-year-old earning $19,000 annually could obtain a plan with a monthly premium of less than $5. But there would be $1,650 out of pocket expenses for one plan.
In general, out of pocket expenses represent the most a person would pay in a year for in-network health care services.
The benefits offered by the marketplace plans have been enhanced through COVID-19 relief legislation passed during the President Joe Biden Administration. Because of that legislation, people pay lower monthly premiums and less in out of pocket expenses than they did previously.
Robin Rudowitz, director of Program on Medicaid and the Uninsured for KFF, said the “the enhanced coverage subsides” people currently are benefitting from are set to expire in 2025. After that, people will be paying more for premiums and more in deductibles and out of pocket expenses.
In addition, Rudowitz pointed out that according to a recent consumer survey, people with Medicaid, even though they generally have more serious health care issues and thus more opportunities for problems, rate their coverage through Medicaid higher than those on private marketplace plans rate their policies.
State Insurance Commissioner Mike Chaney was one of the first state officials to argue in favor of expanding Medicaid just to those earning less than 100% of the federal poverty level to ensure the people above that income level remained in the marketplace.
Chaney said there are about 140,000 Mississippians between 100% and 138% of the federal poverty level who have insurance through the marketplace. Under the federal law, if those people are eligible for Medicaid expansion, through an expansion in their state, they no longer would receive the federal help with the private insurance option. With no federal financial assistance, low income people would not be able to afford the marketplace plans.
Moving those people to Medicaid “would destroy the exchange,” Blackwell said. But 40 other states have expanded Medicaid, and they still have exchange policies for those earning too much to qualify for Medicaid expansion.
Some states, such as Arkansas, have used Medicaid expansion funds to pay for private policies for those who would qualify for Medicaid expansion. The federal government allows those states to use their Medicaid expansion funds to pay for the costs of the private health insurance.
The federal government pays 90% of the health care costs for Medicaid expansion. But the federal government would not recognize the Senate plan as Medicaid expansion and thus would pay only 77% of the costs, thus costing the state more to cover fewer people, according to various studies. The federal government also will pay Mississippi an additional nearly $700 million over a two-year period as an incentive to expand Medicaid.
KFF, the national non profit that studies health care issues, “estimates that approximately 166,000 uninsured adults would be eligible for expansion – this includes 102,000 who currently fall into the coverage gap (earning less than 100% of the federal poverty level) and another 64,000 who have incomes between 100% and 138% and could be eligible for marketplace coverage but not enrolled.”
In addition there are 140,000 Mississippians who have private insurance through the exchange would have to drop their policy and sign up for Medicaid if expansion is approved by the Legislature.
Based on the experiences of hospital officials, replacing those private policies with Medicaid would not necessarily be a bad thing.
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