Low-income people in Arkansas and other Southern states prefer Medicaid to private insurance (but what about the private option?) | Arkansas Blog

Thursday, October 9, 2014

Low-income people in Arkansas and other Southern states prefer Medicaid to private insurance (but what about the private option?)

Posted By on Thu, Oct 9, 2014 at 5:46 PM

Margot Sanger-Katz at the New York Times Upshot blog reports on a new study published in Health Affairs. 

[P]oor residents of Arkansas, Kentucky and Texas, when asked to compare Medicaid with private coverage, said that Medicaid offered better “quality of health care” and made them better able to “afford the health care” they needed.

Medicaid, the federal-state program for poor and disabled Americans, is a frequent political target, often described as substandard because of its restricted list of doctors and the red tape — sometimes even worse than no insurance at all.

But repeated surveys show that the program is quite popular among the people who use it. A 2011 survey from the Kaiser Family Foundation found that 86 percent of people who had received Medicaid benefits described the experience as somewhat or very positive. A more recent Kaiser survey showed that 69 percent of Americans earning less than $40,000 a year rated the program important to them or their families.

The new study found that beneficiaries preferred Medicaid in terms of "quality of health care" and being able to "afford the health care," but gave Medicaid lower marks than private health insurance in terms of seeing “doctors you want, without having to wait too long” and “to have doctors treat you with care and respect.”

The affordability portion is important, as the people involved here have low incomes, but it's also not exactly surprising. Medicaid doesn't charge premiums. Private insurance costs money. Of course people will feel like they can better afford the care they need with Medicaid. But questions of cost aren't disconnected from questions of care for beneficiaries. Medicaid's guaranteed benefits package and cost-sharing protections made beneficiaries feel like they were getting a better overall quality of care too.

Here's an interesting question, since one of the states studied was Arkansas: what would beneficiaries think if the choice was between private coverage via the private option and traditional Medicaid? That scenario is different: the beneficiaries have the same coverage guarantees and cost-sharing protections that they do under Medicaid, and they don't pay any premiums.

Anecdotally, many private option beneficiaries have told me they prefer experience of private insurance to traditional Medicaid (again, beneficiaries pay zero premiums either way). Part of this is a stigma factor attached to the Medicaid program, particularly in small, rural communities. One beneficiary told me, "I'm covered under Blue Cross. There's nothing on that card that says I'm poor." Another told me, "When you live in a community where everybody knows you and stuff — with the [private insurance] card, they can't put you in a class or anything like that." Outreach workers also told me that some people were more open to signing up for, say, a "Blue Cross plan" than "Medicaid." 

Many private option beneficiaries can directly compare their experiences, because when first deemed eligible, they're covered by traditional Medicaid until the enrollment process into private plans is complete. Some beneficiaries told me that they believed they were treated differently and got better care with private insurance versus traditional Medicaid. This is based on reporting I've done over the last year (I've talked to well over a hundred beneficiaries) but again, this is all anecdotal. Many other beneficiaries said they didn't care one way or the other, they were just happy to be covered.

Matthew Glass, CEO of Fidelity Insurance Group, has probably signed up more people with the private option than anyone else in the state. He said, "I can tell you without a doubt they prefer private insurance over Medicaid. My sample size is huge and in every county." Glass argued that in addition to the stigma factor, private option coverage gives dramatically better access to care in Arkansas than traditional Medicaid. 

"I don't know of any provider in Arkansas that doesn't take Blue Cross," Glass said. "I know lots who don't take Medicaid." Glass said that he commonly sees scenarios in which the private option beneficiary gains coverage via traditional Medicaid after being deemed eligible, but can't actually get to the provider the beneficiary wants to see until the enrollment is complete in a private plan. In some cases, he said, the beneficiary hasn't seen a doctor in years, but has to wait for the private insurance to kick in because so many doctors aren't taking Medicaid. For example, according to Glass, only one primary care physician in Crittenden County is taking new Medicaid patients; more than 5,000 people in the county have gained coverage via the private option expansion. 

If the access gap is as big as Glass describes, and if access problems in Medicaid have negative impacts on health outcomes as substantial as many conservative critics of the program have suggested, then we might expect to see better health outcomes in the private option than in other states that went with traditional Medicaid. We'll see.

Meanwhile, the points that Glass raises would likely be echoed by the state officials who argued that the private option would be equivalent in cost to traditional Medicaid expansion. Remember, they argued that if you suddenly added 200,000 people to traditional Medicaid, achieving the legally mandated access would be impossible at current reimbursement rates. Rates would have to be raised and would end up more or less in the same spot as private reimbursement rates. That remains a very controversial theory and we should be highly skeptical, but Glass's statements certainly bring into focus the point made by state officials — traditional Medicaid expansion would have been a shock to the current supply of providers and the state would possibly have faced a crisis point in terms of access.  

There's another point to make about the private option and access concerns. Remember, the policy uses a health screener to divert the 10 percent deemed "medically frail" to the traditional Medicaid program. The idea, according to state officials, is that their greater needs will be better served in Medicaid. But this is clearly also about costs: the screener keeps the least healthy people out of the pool in the private market — meaning lower premiums for those shopping for private health insurance, lower costs for the private option policy, and savings on federal Obamacare subsidies. But if the access gap is as large as Glass describes, that policy has the perverse effect of giving the sickest patients the least access to the care they need. Remember, according to Glass, in some rural communities, people are waiting until their private coverage kicks in to see the providers they need. The private option, by design, never gives that private coverage to the neediest patients. 

We're in speculative territory and will have to wait for empirical data. What we know so far is that low-income Arkansans in 2013 preferred Medicaid to private insurance. Researchers from the Health Affairs study are following up this year — it will be fascinating to find out what people who have gained private option coverage in 2014 have to say. 

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