States Seek to Direct Medicaid Patients to Exchanges

Lower-income residents eligible for Medicaid may be directed to buy coverage from health insurance exchanges using tax dollars, an option the Obama administration is weighing.

Multiple states have asked about the arrangement, Gary Cohen, the director of the U.S. Center for Consumer Information and Insurance Oversight, said today on a conference call with reporters. Cohen, whose agency is implementing much of the 2010 health-care law, didn’t say how many governors made the request to use Medicaid money as a conduit for people to obtain private health plans next year through the new exchanges.

“We’re exploring avenues in which that might be able to happen,” Cohen said.

Under the health law, the Affordable Care Act, states have the option of expanding their Medicaid programs to cover everyone earning about one-third more than the federal poverty level -- about $31,322 for a family of four this year. States with Republican governors or Republican-led legislatures have balked at the expansion, saying it may cost too much even though the federal government will pay the entire expense until 2017.

After 2017, the states’ share of the cost of the newly eligible residents never exceeds 10 percent.

Spokesmen for Cohen’s agency didn’t immediately respond to an e-mail seeking more information about the issue.

Governor’s Request

Arkansas Governor Mike Beebe, a Democrat, asked Health and Human Services Secretary Kathleen Sebelius on Feb. 18 if his state would be allowed to have people newly eligible for Medicaid use the exchanges instead. The idea came from Republicans in the state legislature, said Matt DeCample, a spokesman for the governor.

“The answer we got was that we had the flexibility to take the entire expansion population, that we could take as many as we wanted to, and route them through the exchange into private insurance plans,” DeCample said in a Feb. 28 phone interview.

The exchanges are insurance marketplaces due to begin enrolling people Oct. 1 for coverage that begins in January. They will offer private plans from insurers such as UnitedHealth Group Inc. (UNH) to people who don’t get policies at their jobs. The coverage will be subsidized for those earning as much as four times the poverty level, or about $94,200 for a family of four this year.

Coverage in the exchanges will likely be more expensive for taxpayers than Medicaid, DeCample said. Medicaid programs in most states pay hospitals, doctors and other health providers less than commercial insurers.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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