Medicaid Expansion and the use of Account-based Health Plans

David Stephen T, Parente Ramzi Abujamra
2015 Health Care : Current Reviews   unpublished
Introduction As U.S. states contemplate policy options to expand Medicaid to select populations, they confront the challenges of also controlling costs associated with existing and new enrollees. This fact is complicated by the policy challenges associated with serving a poor population and thus new tools and methods should be explored. Importantly, the private health insurance market has developed tools in recent years to control costs and reduce utilization trend with diverse enrollee
more » ... ons. We suggest that examining private market solutions can be useful to state Medicaid systems in controlling costs and utilization trend [1,2]. The private sector has a long history of deploying a variety of cost control mechanisms to reduce utilization trend and make certain that there are not adverse health outcomes. Account-based plans allow individuals to control the spending of basic health care needs such as routine care and thus encourage prudent spending and accompanying reduced utilization of health care services. The theory of account-based health accounts assumes that individuals will control and contribute to the account and thus have a vested interest in what they spend on routine health spending. Health Savings Accounts (H.S.A.s) and other account-based plans have had rapid expansion in the U.S. since 2003 and accompanying reduction in utilization trend [1]. Utilizing past research associated with account-based plans and previous research associated with select Medicaid populations, there are numerous policy scenarios that can assist in predicting how Medicaid beneficiaries can use account-based plan tools. Utilization trend reductions associated with cost-sharing schemes are varied based upon several demographic and health care service type variables. The RAND experiment that examined a large health plan population demonstrated that income played a significant role in determining how private insurance beneficiaries utilized health care services with variations in cost sharing. An important finding and Abstract Objectives: U.S. Medicaid expansion has added over 11 Million new enrollees since 2010 and U.S. states are attempting to integrate the increased population as well as addressing fiscal constraints. Account based plans (such as Health Savings Accounts) have been successfully used to control utilization while providing enrollee flexibility. We suggest that a portion of the 55 million Medicaid beneficiary population can be enrolled in account based plans and assist state and federal Health Insurance Exchanges with the 'churn' that occurs between the two systems while controlling costs. Methods: We use publicly available per capita Medicaid spending in each state to estimate the population that could be enrolled in an account based plan and apply factors from previous private market research in estimating the reduction in utilization trend and spend for the selected population. Results: We find that using conservative enrollment and utilization trend assumptions that states could collectively see a reduction in spend of over $800 million to over $1 billion in a fiscal year. Conclusions: States can enroll select Medicaid populations that could benefit from having a potentially seamless product that would allow individuals to transition between Medicaid plans and state and federal Health Insurance Exchange products while reducing utilization and spend.