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More Medicaid MCOs in ACA Marketplaces Could Lower Premiums

Analysis  |  By John Commins  
   May 06, 2019

Complexity, competition, and inexperience are keeping MMCOs away from the ACA Marketplace.

Goading more Medicaid managed care organizations to participate in the Affordable Care Act's Marketplace could lower premiums for enrollees, according to a new study commissioned by the Robert Wood Johnson Foundation.

In 15 states where marketplace premiums are higher than the national average, Medicare MCOs offer little or no coverage, according to the report, which was compiled by the Urban Institute.

In the 10 states with the lowest average benchmark premiums, all have MMCOs broadly offering marketplace coverage, the report found.

The report suggests that some insurers see Medicaid as more attractive than the Affordable Care Act marketplaces because Medicaid offers plans more policy stability, clearer delineation of rules, and less burdensome regulation.

"As policymakers grapple with affordable ways to expand coverage, they may consider ways to incentivize Medicaid insurers to expand their offerings," said Mona Shah, senior program officer at the Robert Wood Johnson Foundation.

"If Medicaid managed care plans offer coverage to more people and in more places, it could help protect consumers from higher healthcare costs," Shah said.

Medicaid MMCOs expressed concern about the different marketing and pricing tasks that would be necessary for success in the marketplaces. In other words, the MMCOs said entering the ACA Marketplaces was too complex.

Among the obstacles:

  • Marketplace insurers must compete for enrollees, which some Medicaid insurers do not have experience with because they are assigned enrollees or exclusive territories by some state Medicaid programs.
     
  • Marketplace insurers face more financial risk, because marketplace rules and conditions have changed drastically from year to year, making it more difficult for insurers to predict how costly their enrollees will be, and leading some insurers to lose money on their marketplace business.
     
  • Marketplace insurers need more sophisticated actuaries to price plans, whereas states often set Medicaid insurers' capitated rates.
     
  • Marketplace insurers must be able to collect premiums from consumers, whereas most Medicaid plans are available without a premium.
     
  • Marketplace insurers must obtain special insurance licenses and maintain larger capital reserves to cover any unexpected financial losses.

The Urban Institute researchers identified policy changes that could make the ACA's marketplaces more attractive to MMCOs. For example, the MMCOs have shown interest in a recent Medicaid buy-in program that allows residents to pay premiums to "buy in" to Medicaid.

Under that plan, the coverage for consumers who enroll in Medicaid buy-in might be the same as someone who would otherwise sign up for marketplace coverage.

However, the organizational requirements that would apply to sellers of these two types of plans could end up being very different. If a Medicaid buy-in program used Medicaid's less stringent requirements, it could prompt organizations not currently offering marketplace plans to offer new coverage options to consumers.

“As policymakers grapple with affordable ways to expand coverage, they may consider ways to incentivize Medicaid insurers to expand their offerings. ”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Some insurers see Medicaid as more attractive than the ACA marketplaces because Medicaid offers more policy stability, clearer rules, and less burdensome regulation.

MMCOs have shown interest in a recent Medicaid buy-in program that allows residents to pay premiums to 'buy in' to Medicaid.


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