How to Stop the Bouncing Between Insurance Plans Under Obamacare
By Dhruv Khullar
The New York Times, March 23, 2016
Millions of Americans are finding Obamacare to be unstable ground.
Consider a young construction worker, a patient of mine, whose hours are cut during the winter. His income drops slightly, and now his family no longer qualifies for financial assistance through marketplace subsidies and must sign up for Medicaid. He had finally managed to control his diabetes with his primary care doctor, but when scheduling his next appointment, he is told his doctor doesn’t accept Medicaid.
When the summer rolls around, he picks up more hours, and starts making too much for Medicaid. He has to go back on a marketplace plan, a different one from before. Meanwhile, providers and insurance plans rack up administrative costs as they accommodate these changes.
Because of fluctuations in income, millions of Americans move back and forth between Medicaid and the Affordable Care Act’s insurance marketplace, leading to significant health and financial costs for individuals, states and insurance companies.
This cycling across different forms of insurance is called “churning.” Churning is not a new phenomenon. In the past, people who rolled off Medicaid simply became uninsured. But now many who become ineligible for Medicaid become eligible for marketplace subsidies, and vice versa.
The Affordable Care Act sets the eligibility divide between Medicaid and the insurance marketplace at 138 percent of the federal poverty level, or about $33,000 for a family of four — a threshold at which many people experience substantial income fluctuation. Up to 28 million people may move between plans annually, according to a 2011 study by Benjamin Sommers at Harvard and Sara Rosenbaum at George Washington University. Over the course of four years, only 19 percent of adults will remain continuously eligible for Medicaid and 31 percent continuously eligible for marketplace subsidies. Almost 40 percent will have churned more than four times during this period.
Churning is also costly for taxpayers. Research suggests that average monthly spending on individuals continuously enrolled in Medicaid is two-thirds what it is for those enrolled for just half the year. And the administrative costs can be considerable; one study found that it costs $280 to enroll a child in Medicaid.
What can be done? One option is to require states to guarantee 12 months of continuous eligibility when people sign up for Medicaid. Currently fewer than half of states do this for children and pregnant women, and only New York does it for all adults. An analysis by the Commonwealth Fund found that offering 12 months of continuous Medicaid eligibility would reduce churning by 30 percent. Guaranteeing coverage through the end of the calendar year would reduce churning by nearly 80 percent.
Another approach is to smooth the transition between Medicaid and the marketplace plans by aligning plans, benefits and networks of providers. States are increasingly relying on managed-care companies to provide Medicaid benefits; in 2015, the number of Medicaid beneficiaries using private insurance plans reached 46 million. Making sure people can use similar providers and services — regardless of which insurance they technically qualify for at that time — could help.
Washington is helping insurers in the marketplaces develop Medicaid managed-care plans. A more direct path is simply to allow Medicaid-eligible populations to buy private plans on the marketplaces.
While the patchwork of health care in the United States may make some amount of churning unavoidable, it is possible to create a less wasteful, more unified system that works better for patients and providers.
Dhruv Khullar is a resident physician at Massachusetts General Hospital and Harvard Medical School.
By Don McCanne, M.D.
San Juan Capistrano, CA
Tweaking the alignment of Medicaid and the private ACA exchange plans still leaves in place a fragmented system of incongruous provider networks, and unstable cost sharing depending on plan actuarial values and sliding-scale subsidy qualifications. These efforts result in wasteful administrative excesses, inefficiencies and inequities in care.
A well designed single payer system – an improved Medicare for all – would provide stable health care coverage for life – totally eliminating churning. The savings from the administrative efficiencies would be enough to eliminate current financial barriers faced by the uninsured and the underinsured, while reducing inequities and ensuring access for all.
Tweaking a highly dysfunctional system just won’t get us there.
By Don McCanne, M.D.
Dhruv Khullar has provided us with an important policy lesson. He seems to be amongst those who believe that we should accept Obamacare (ACA) as a given and build on it through incremental reform. Amongst the multitude of problems with ACA, he has selected as an example the issue of churning in and out of Medicaid and the private ACA exchange plans. What does he propose?
He suggests reducing churning by offering twelve-month eligibility for Medicaid, and he suggests aligning benefits and provider networks between Medicaid managed care and private ACA exchange plans – a proposal with obvious profound administrative complexity. Further, when these anti-churning measures are implemented, he concedes that “the patchwork of health care in the United States may make some amount of churning unavoidable.”
This is the policy lesson. Our fragmented, dysfunctional financing infrastructure is so highly flawed that patches to it will have very little impact in moving us closer to the ideal of a quality health care system that serves all of us well. In contrast, the patches themselves lead to further administrative waste with associated higher costs.
The obvious answer to churning is to have a single, well-designed Medicare for all program in which individuals are enrolled for life. That would also take care of most of the multitude of other health care financing problems that Dhruv Khullar nor I could address here.