Wednesday, March 23, 2016
The New York Times
March 23, 2016
How to Stop the Bouncing Between Insurance Plans Under Obamacare
By Dhruv Khullar
Millions of Americans are finding Obamacare to be unstable ground.
Consider a young construction worker, a patient of mine, whose hours are
cut during the winter. His income drops slightly, and now his family no
longer qualifies for financial assistance through marketplace subsidies
and must sign up for Medicaid. He had finally managed to control his
diabetes with his primary care doctor, but when scheduling his next
appointment, he is told his doctor doesn't accept Medicaid.
When the summer rolls around, he picks up more hours, and starts making
too much for Medicaid. He has to go back on a marketplace plan, a
different one from before. Meanwhile, providers and insurance plans rack
up administrative costs as they accommodate these changes.
Because of fluctuations in income, millions of Americans move back and
forth between Medicaid and the Affordable Care Act's insurance
marketplace, leading to significant health and financial costs for
individuals, states and insurance companies.
This cycling across different forms of insurance is called "churning."
Churning is not a new phenomenon. In the past, people who rolled off
Medicaid simply became uninsured. But now many who become ineligible for
Medicaid become eligible for marketplace subsidies, and vice versa.
The Affordable Care Act sets the eligibility divide between Medicaid and
the insurance marketplace at 138 percent of the federal poverty level,
or about $33,000 for a family of four — a threshold at which many people
experience substantial income fluctuation. Up to 28 million people may
move between plans annually, according to a 2011 study by Benjamin
Sommers at Harvard and Sara Rosenbaum at George Washington University.
Over the course of four years, only 19 percent of adults will remain
continuously eligible for Medicaid and 31 percent continuously eligible
for marketplace subsidies. Almost 40 percent will have churned more than
four times during this period.
Churning is also costly for taxpayers. Research suggests that average
monthly spending on individuals continuously enrolled in Medicaid is
two-thirds what it is for those enrolled for just half the year. And the
administrative costs can be considerable; one study found that it costs
$280 to enroll a child in Medicaid.
What can be done? One option is to require states to guarantee 12 months
of continuous eligibility when people sign up for Medicaid. Currently
fewer than half of states do this for children and pregnant women, and
only New York does it for all adults. An analysis by the Commonwealth
Fund found that offering 12 months of continuous Medicaid eligibility
would reduce churning by 30 percent. Guaranteeing coverage through the
end of the calendar year would reduce churning by nearly 80 percent.
Another approach is to smooth the transition between Medicaid and the
marketplace plans by aligning plans, benefits and networks of providers.
States are increasingly relying on managed-care companies to provide
Medicaid benefits; in 2015, the number of Medicaid beneficiaries using
private insurance plans reached 46 million. Making sure people can use
similar providers and services — regardless of which insurance they
technically qualify for at that time — could help.
Washington is helping insurers in the marketplaces develop Medicaid
managed-care plans. A more direct path is simply to allow
Medicaid-eligible populations to buy private plans on the marketplaces.
While the patchwork of health care in the United States may make some
amount of churning unavoidable, it is possible to create a less
wasteful, more unified system that works better for patients and providers.
/Dhruv Khullar is a resident physician at Massachusetts General Hospital
and Harvard Medical School./
San Juan Capistrano, CA
Tweaking the alignment of Medicaid and the private ACA exchange plans
still leaves in place a fragmented system of incongruous provider
networks, and unstable cost sharing depending on plan actuarial values
and sliding-scale subsidy qualifications. These efforts result in
wasteful administrative excesses, inefficiencies and inequities in care.
A well designed single payer system - an improved Medicare for all -
would provide stable health care coverage for life - totally eliminating
churning. The savings from the administrative efficiencies would be
enough to eliminate current financial barriers faced by the uninsured
and the underinsured, while reducing inequities and ensuring access for all.
Tweaking a highly dysfunctional system just won't get us there.
Comment by Don McCanne
Dhruv Khullar has provided us with an important policy lesson. He seems
to be amongst those who believe that we should accept Obamacare (ACA) as
a given and build on it through incremental reform. Amongst the
multitude of problems with ACA, he has selected as an example the issue
of churning in and out of Medicaid and the private ACA exchange plans.
What does he propose?
He suggests reducing churning by offering twelve-month eligibility for
Medicaid, and he suggests aligning benefits and provider networks
between Medicaid managed care and private ACA exchange plans - a
proposal with obvious profound administrative complexity. Further, when
these anti-churning measures are implemented, he concedes that "the
patchwork of health care in the United States may make some amount of
This is the policy lesson. Our fragmented, dysfunctional financing
infrastructure is so highly flawed that patches to it will have very
little impact in moving us closer to the ideal of a quality health care
system that serves all of us well. In contrast, the patches themselves
lead to further administrative waste with associated higher costs.
The obvious answer to churning is to have a single, well-designed
Medicare for all program in which individuals are enrolled for life.
That would also take care of most of the multitude of other health care
financing problems that Dhruv Khullar nor I could address here.
at 2:36 PM