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Game Changer: Medicaid Expansion via State Exchanges

March 11, 2013 

Is the Arkansas deal with HHS a sign of where Medicaid is headed?

A seemingly routine meeting between a state governor and HHS to discuss implementation issues related to the Affordable Care Act (ACA) may have created a new path forward for Medicaid Expansion.

Preliminary reports indicate that Arkansas has secured a deal that allows it to use funds designated for Medicaid Expansion to purchase insurance for Medicaid patients in State Exchanges. While the details and scope of this arrangement are currently not available, a preliminary assessment of this agreement suggests a path forward for states reluctant to agree to Medicaid Expansion because of the downstream costs that could result when states assume a portion of the funding costs beginning in 2017. This potential new path forward, a shift in patients from Medicaid to State Exchanges, has broad implications for how the ACA may play out in the future:
-This shift could alleviate some of the physician shortage expected to occur as Exchange provider payment rates will undoubtedly be more favorable than Medicaid reimbursement
-The shift could adversely impact the Exchange risk pool and drive premiums higher than expected for this population
-The shift would enhance the market importance and impact of a vibrant State Exchange and increase dependence of the future market dynamic on private insurers vs. what was expected to be a greater government role in the insurance marketplace
-The shift could threaten the long-term viability of the Medicaid program if its’ provider payment rates did not keep pace with Exchange payment rates
-The shift would substantially increase the cost of the Expansion if the Arkansas deal was offered to every state
With so much conversation focused on this arrangement and a potential rush by other states to do the same deal, you can bet we haven’t heard the last of Medicaid Expansion via State Exchanges.

Check out Pharmspective’s White Paper on this topic here.

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