Alternatives Sought for ACA Health Plans

The highly contentious debate over expanding state Medicaid programs may be given another alternative.

In the highly contentious debate over expanding Medicaid programs, states may be given another alternative. Earlier this week, Pennsylvania Governor Tom Corbett revealed a plan that would utilize federal subsidies intended to expand the state’s Medicaid to instead be allocated towards helping low-income residents buy private health insurance. Similar proposals are also being seen in states like Iowa and Arkansas.

"These reforms are state-based solutions that will enable sustainability to the current Medicaid program, providing critical care for those most in need," said Gov Corbett.

Gov Corbett additonally seeks a monthly premium in place of copayments for existing Medicaid recipients, and would require able-bodied Medicaid beneficiaries to show they are actively seeking work. The governor reasons these changes will better align the Medicaid program with private and commercial insurance for non-disabled adults.

These alternative proposals to use Medicaid expansion funding for private insurance subsidies would require US Department of Health and Human Services approval. So far, 26 states have questioned expanding Medicaid due to the increased costs associated with it. While Pennsylvania would see an estimated 350,000 low income, non-elderly state residents gain coverage under the expansion, as many as 9 million Americans are expected to obtain health coverage next year as the income threshold for Medicaid eligibility is raised to 138% of the federal poverty line.

States are not the only entities considering alternatives in place of more traditional healthcare plans. Walgreens pharmacy is one of 17 large employers forfeiting their employer-based plans in favor of using a private exchange. While private exchanges were not part of the Affordable Care Act mandates, they are growing in popularity and mirror the coverage of federal public exchanges. Accenture Research reports that by 2017, nearly 20% of employees nationwide could get their health insurance through a private exchange. National Business Group on Health also suggests that 30 of large employers are considering moving active employees to exchanges by 2015.

Grocery store chain Trader Joe’s Co, for instance, recently announced its intention to end health benefits for part-time workers completely. Instead they are offering part-timers $500 in compensation to help them buy insurance elsewhere. The ACA law mandates that employers only cover those employees clocking more than 30 hours a week, which is driving companies like Trader Joe's to reconsider many of their long-standing employee benefits. Reform is often blamed as the catalyst for making new insurance options too costly.

“Depending on income earned outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the ACA, many crew members should be able to obtain health care coverage at very little, if any, net cost,” the company said in a statement.

Around the Web

Pennsylvania Proposes Alternative to Expansion of Medicaid [Reuters]

Walgreen Moves Employees to Private Healthcare Exchange [Reuters]

Trader Joe’s Sends Part-Timers to Obama Health Exchanges [Bloomberg]