Extend Marketplace Coverage to Insure More People in States That Have Not Expanded Medicaid
by Sherry Gilead, Richard G. Frank – The Commonwealth Fund 6/10/21
The top priority in health policy today should be providing health insurance to people in the so-called coverage gap. This group — which includes at least 2.2 million people —faces a Catch-22, an unanticipated result of the 2012 U.S. Supreme Court decision that made the Medicaid expansion provision of the Affordable Care Act (ACA) optional for states.
All strategies to address the gap population would provide nonexpansion states with more federal funds than currently flow to states that have already expanded, because state governments pay 10 percent of the cost of the Medicaid expansion population and none of the cost of the marketplace. Under a marketplace-based plan or a public option, there also would be cross-state inequity at the provider level. Provider payment rates in marketplace plans are close to Medicare rates, and typically higher than Medicaid rates. Medicaid providers in expansion states might prefer that their states end the Medicaid expansion so they could collect the higher marketplace rates.
The federal government could address this by fully financing enhanced payment rates for selected groups of providers in existing expansion states, as it did for two years under the ACA. Adding this feature might even encourage nonexpansion states to expand, so that their existing Medicaid providers could gain access to this fee bump. Congress also could require pharmaceutical companies to offer Medicaid-equivalent rebates for prescriptions purchased by gap-population members in marketplace plans.
For the past seven years, in most states, Americans of all income levels have been eligible for affordable insurance coverage. A temporary expansion of the existing ACA marketplaces would effectively and rapidly extend the benefit to people in the coverage gap in nonexpansion states.
