What could be the possible benefits, and downfalls of a Medicaid Buy-In Program?
To look at the benefits of a Medicaid Buy-In (MBI) Program, first we have to examine the costs of private insurance for the state. Chief amongst these costs are: The economic implications in the job market due to the reliance on employer-based healthcare; the cost to the taxpayers to fund the current Medicaid program; the strain on the state economy to cover those left outside the realm of available subsidies; and the lack of coverage options for consumers. Each of these issues are areas we could find benefit, if we successfully implement an MBI program in Delaware. However, there are also areas where the MBI program could be construed in a negative light. Primarily, there could be a high initial cost as the system adjusts to the influx of new policies, the program could have issues in implementation, and the federal government could decide to step in and get involved.
Currently, we are in the process of discussing ways that we can help foster economic growth in our state. One of the ways in which we can do that is to make it easier for businesses to start up, employ workers, and remain competitive in the employment marketplace. Healthcare ties into all of those areas. In today’s employment marketplace, job seekers are flocking to industries and companies that can offer a benefit package that includes health care. To the point that companies who do not offer healthcare benefits are at a significant disadvantage. If there were an affordable option for people, outside of the employer based health care system, then smaller businesses could have a better chance attracting the best workers. This would also give them more room to negotiate wages. Many people forget the fact that even though you only pay out $50-$75 a paycheck for healthcare, insurance companies are still charging the full premium. Your employer picks up the rest of the bill each month. Benefit packages are one of the more costly aspects of being an employer, and is a large contributor of stagnant wages in the US. Furthermore, if employers offer an incentive to join the MBI program, such as an employer backed Health Savings Account to cover the cost of your deductible, we could see the enrollment numbers jump significantly.
The number of enrollees is key to the success of the program. Distributing the costs of the program across many enrollees is crucial for the program to remain solvent. If only a few people sign up for the program, and they happen to be predominantly unhealthy or elderly, then the cost will outweigh the revenue generated. One of the largest benefits for this program is the revenue it can generate for the state. The current cost of the Medicaid program is a huge portion of our state budget, around 20%. Healthcare in total is even higher. In order for an MBI program to succeed it actually has to offset some of the costs for our current program. If we implement the program correctly, it is highly likely that this will happen.
Current debate over the possibility of a public option centers around the idea of implementing it by expanding programs for the elderly population first. However, that will never work in Delaware. One reason our healthcare costs are already so high is due to our higher elderly population. In order to spread the costs across the program, we have to bring in the younger generation who tend to rely less on their insurance policies. Additionally, with a greater number of enrollees the MBI the state will have the ability to negotiate prices and leverage a large pool of policyholders to make sure that their clients are being treated by all service providers. In order to do that though, the costs have to be low enough to attract consumers.
One of the biggest demographics of the coverage gap between the Medicaid expansion and the private insurance marketplace is young adults over the age of 26. This demographic was able to stay on their parent’s policies thanks to the ACA, and most have never paid for insurance. In fact, the demographic who saw the largest gain under the ACA where the young adults who were able to stay on their parent’s policies. However, after the age of 26, the uninsured rate jumps to the highest of any demographic. Unfortunately, this demographic likely doesn’t see the benefit of paying for a product which they do not use, especially when the fine is usually cheaper. Closing this coverage gap first and foremost is actually one of the ways we can ensure the solvency of an MBI program. By bringing in this younger, healthier demographic we can spread out the costs.
Finally, adding the ability to gain access to an MBI program would create a valuable alternative to the current monopoly found in the Delaware health care exchange. As of 2017, Blue Cross Blue Shield is the last remaining insurer on the Delaware Health Care Exchange. That means that all the demand flowing into the exchange is being met by only one supplier. There is no more surefire way to cause prices to skyrocket than to place the full demand of a product on one privately ran company to supply. By adding an MBI program, Delaware will always have at least two companies to choose from. Republicans state that we cannot eliminate choices for the consumer, and they are right. But, when we talk about being able to choose our health care provider, we often leave out the choice of a public option. If citizens desire the ability to choose that the government run their healthcare, at no expense to those who choose private insurance, why should anything stand in the way of that.
So, what are the possible downfalls of an MBI program being set up in Delaware? Again, without the system already taking hold in another state, it is pure speculation as to what could go wrong. However, theories have been floating around about a national public option for years, and the consequences remain just as probable for a state-run program as they do for a national program. One of the main problems could be the high initial costs as the government strives to correct for the incoming number of people applying for the program. With an increased number of policyholders coming into the system, more administrators will be needed to handle the volume of claims and applications. This will create an immediate need for expansion of current operations in the state, and that means more money. That is why it is so important that the program be implemented correctly. If we do as many have suggested, and open the program in reverse order by age (the elderly generation first), the costs will be compounded by an influx of people who routinely use their insurance policies. If however, we open the program in ascending order by age (younger generation first), then we will introduce a demographic that ordinarily does not take advantage of their insurance, but is eager for a public system. Thus, we can mitigate some of the initial costs that theorists have subscribed to starting such a program.
Lastly, the biggest problem with the implementation of an MBI program is the uncertainty surrounding the commitment from the federal government. If we set up an MBI program in Delaware, and the federal government decides that they do not approve, they could revoke the waiver away and shut down the program. Moreover, without any commitment as to whether they will cover their portion of the costs for MBI policy holders, it is hard to dictate what the prices will be. Surely, as other states look towards this option, the government will feel increasing pressure to make their position clear. Until then, we have to assume that they will not chip in their portion, and set the price at the full amount. In the worse-case scenario, they do end up putting up their normal amount of funding, and the state gets to use the surplus to help bring down the cost of the program.
The time is coming where we have to make a choice: Is healthcare a human right, or is it a privilege. If we decide it is a human right, then we must make it so everyone is covered at an affordable rate, for both the consumer and the insurers. Will that include multiple changes in our current system? Absolutely. However, one of those changes has to be the creation of at least the option of buying into a public plan. Many on the far-right state that a universal system eliminates choice, but what happened to the consumer being able to choose to buy into a state-run program? If we have to keep the freedom of choice, then the choices need to include a public option, and if the federal government is not willing to step up to that plate, then they should allow the states to do so. A Medicaid Buy-In program is the obvious solution to our rising Medicaid costs in Delaware, closing the large insurance gap for consumers, and breaking up the monopoly on health care in our state.
If you want to get involved in pushing for a Medicaid Buy-In program for Delaware, please attend the September 7th DHSS meeting and sign our petition to look into an MBI program for Delaware.
For More information about the meeting please visit: http://dhss.delaware.gov/dhcc/files/benchmarksummitfirst.pdf.