Some U.S. States Can Shift Medicaid Funds to Exchanges

Low-income people may get Medicaid money to buy health insurance from private plans such as UnitedHealth Group Inc. or Humana Inc. in a “limited number” of states, U.S. officials said.

Arkansas and Ohio have asked President Barack Obama’s administration to allow them to adjust how Medicaid dollars are used. The U.S. Centers for Medicare and Medicaid Services said yesterday it would allow an unspecified number of states to do this as long as it doesn’t cost the government more than the traditional Medicaid program.

The plan is a departure from the 2010 Affordable Care Act, which calls for an expansion of government-run Medicaid, the health program for the poor. Under the health law, about 12 million people are expected to be added to Medicare’s rolls by 2020 as the program grows to cover people earning as much as about 138 percent of the federal poverty level, or about $32,500 for a family of four.

“We remain committed to working with states and providing them with the flexibility and resources they need to build new systems of health coverage,” Cindy Mann, the agency’s Medicaid director, said in a blog post yesterday. “Premium assistance is simply one option.”

Arkansas Governor Mike Beebe, a Democrat, received informal approval on Feb. 18 from Kathleen Sebelius, the U.S. Secretary of Health and Human Services, for a proposal to use money for the Medicaid expansion to instead buy private coverage for low-income people in the state’s new insurance exchange.

Awaiting Approval

The state’s Medicaid director, Andy Allison, said in an interview yesterday that he hopes to receive approval for the plan from Mann’s agency soon.

Ohio Governor John Kasich is negotiating a similar plan for his state with Mann’s agency. Republican lawmakers in other states including Florida and Tennessee have expressed interest, and are waiting on the outcome of the Arkansas and Ohio negotiations, said Matt Salo, executive director of the National Association of Medicaid Directors in Washington.

“Everybody else is sort of saying, ’we’re going to watch this,”’ Salo said in a phone interview yesterday. “If Arkansas and Ohio can’t figure this out, they’ll reevaluate.”

Mann’s agency said in the question-and-answer document that states can include in their proposals savings they may gain by adding more people to exchanges.

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