The U.S. health-care system is, to put it mildly, in a state of flux. The complex system of near-universal access to public and private health insurance created by the Affordable Care Act is being threatened internally by declining insurer participation and externally by the slow-motion riot of Republican plans to repeal and replace it. Within and beyond the Obamacare repeal effort, the Trump administration and congressional Republicans are seeking massive cutbacks in Medicaid funding, partially through a permanent per-capita cap on federal allocations to the states. The CHIP program, a sort of Medicaid supplementary program covering children and run by the states, is up for reauthorization. And in several states, including California and New York, serious initiatives are underway to go in an entirely different direction, with state-run single-payer systems that would in theory replace all existing public and private insurance with a universal insurance plan modeled on Medicare.
In the midst of all this activity there’s a new idea percolating up in Nevada: letting anyone without health insurance buy into the state’s Medicaid program. This would include people who qualify for Obamacare tax credits, which could be used to pay for the buy-in; in effect, that would make Medicaid a public option — a phrase you might remember from Obamacare deliberations, when it was a Medicare buy-in — for individual insurance purchasers. Because of Medicaid’s low reimbursement rates for doctors and other health-care providers (significantly lower than Medicare), it should provide an economical alternative to private insurance, though at the cost of narrower provider options (a significant number of physicians do not accept Medicaid patients). Medicaid also has a broad range of benefits, with no co-pays or deductibles.
A bill to create this new Medicaid buy-in has cleared the legislature, and is awaiting action by Republican governor Brian Sandoval. It is unclear what he will do, though it is noteworthy that he has long been a staunch supporter of the expanded Medicaid program the Affordable Care Act created. Since the legislation leaves a lot of crucial details — e.g., the pricing of the buy-in and the possibility of cost-sharing measures like co-pays or deductibles — to future state regulation, Sandoval may be in a position to shape the proposal to his own liking. Nevada would also need to secure a waiver from the federal Department of Health and Human Services to implement the buy-in; initial indications are that the feds might not have a problem with it so long as it has no impact on federal Medicaid spending in Nevada.
What makes the idea particularly appealing at the moment is that it might be compatible with any of the most likely trajectories of federal health-care policy. A Medicaid buy-in could function quite well under the current Obamacare system — again, as a sort of public option that could be offered alongside private policies on the individual insurance exchanges. But it could also survive a Medicaid per-capita cap or a rollback of the ACA’s Medicaid expansion, since presumably the new enrollees would pay for their own coverage while benefitting from Medicaid’s low costs.
In theory you might expect private insurers to fight a Medicaid buy-in tooth and nail, just as they successfully fought a public option, and also a Medicare buy-in (for people over 55), in the original Affordable Care Act debate. But the vast majority of current Nevada Medicaid beneficiaries are in managed-care plans operated under contract by private insurers, who might view a buy-in as simply a way to get a large number of new customers who might otherwise be uninsured.
It’s also worth noting that during the ACA debate both the Medicare buy-in idea and the more general concept of a public option were quite popular, especially among progressives. So it might also have some bipartisan support. Its chief sponsor in the Democratic-controlled Nevada legislature is Democrat Michael Sprinkle.
So could a Medicaid buy-in offer other states a way out of the problems created by Obamacare’s reliance on unstable private insurance markets and Trumpcare’s crackdown on federal spending? Possibly, though as Sarah Kiliff points out in a Vox overview of the Nevada proposal, it is important to understand that Medicaid already varies a lot from state to state:
[T]his variation is an opportunity for states that want to experiment with the public program by tacking on a buy-in option. If Nevada’s bill does become law, it will show other states how such a program might work — and if it works well, liberal states may be inclined to mimic the idea.
But the variation also makes it difficult to see Nevada serving as the start of a national public option. Yale University’s Jacob Hacker argues that while this option might work in a single state, trying to use Medicaid as the model for a national public option would mean people in different states would get significantly different coverage.
Assuming Sandoval or the Trump administration don’t kill the Nevada proposal outright, the big question will be the buy-in’s pricing. If it’s competitive with current offerings, it could become a pretty big — and good— deal. And if nothing else, it will draw attention to the bargain Medicaid provides for beneficiaries and taxpayers alike.
