Click to enlargeWhen Governor-elect JB Pritzker and incoming legislators take office a few days from now, we hope among the top-of-mind issues for them will be healthcare – and the possibility of creating a public option that would allow Illinois residents to purchase a premium to participate in the state’s Medicaid program. Candidate JB Pritzker talked about his vision for such an initiative, which he called “IllinoisCares,” and his platform included a public health insurance option that would be available to all residents.
IllinoisCares would allow Illinois residents to purchase health insurance from the state, rather than a commercial plan. Forty-two states – including Illinois – already have Medicaid buy-in programs, but they are limited to working people with disabilities who have not been able to purchase affordable health insurance coverage that meets their health needs in the private market. The public option was a feature of early drafts of what became Obamacare, but it did not make it into the final law.
In 2018 there was a lot of debate about “Medicare for all,” another incarnation of the public option concept. Unlike Medicare, however, Medicaid is essentially a state program, and has more-comprehensive coverage than Medicare, including things like comprehensive habilitation and rehabilitation services and allowing states to negotiate drug prices. As a result, a public option built off of a state’s Medicaid program is seen by some as a better option for people and payers.
Prior to 2014, states that wanted to extend Medicaid to all of their residents faced medical eligibility and income restrictions, since Medicaid is an entitlement program. Innovative states would go through contortions to develop waivers to expand coverage to populations who could not meet strict medical criteria. The Affordable Care Act blew the top off this, by opening Medicaid eligibility to residents who only had to meet income criteria, rather than disability criteria as well. In Illinois, this brought coverage to many who were working, particularly in industries like construction and franchise fast food, where employers generally fail to offer coverage.
But today, many Illinoisans still make too much to qualify for Medicaid, yet find that they still cannot afford insurance. Marketplace coverage continues to be unaffordable for many. Congress’ and the current administration’s attempts to thwart the program have further destabilized the market, driving premiums up and leading to insurers leaving. Given the state of things, Medicaid could be more attractive to many than a marketplace plan with high deductibles and copays, and possible high-ish premiums as well.
The 1332 waiver, a device added by the Affordable Care Act to Medicaid’s toolkit to allow states to allow for innovation, was seized upon by the Trump Administration as a means for states to dismantle the ACA and undermine the intent of Medicaid, by imposing work requirements and other strictures. But some states are now turning to the 1332 waivers as a way to bring about an expansive widening of the program.
More than a dozen states are in various stages of considering Medicaid buy-in as a public option, and as of summer, at least six had proposals in their legislatures. The November election, which brought in nine new democratic governors and flipped several statehouse – ours included – has ushered in fresh possibilities. Newly elected governors in Minnesota, New Mexico, and Wisconsin also made proposals of this kind part of their campaigns.
A buy-in makes particular sense in states like New Mexico, where over 40% of residents are already on Medicaid, and there has had a groundswell of support for the idea, with multiple counties and cities passing resolutions of endorsements.
For a buy-in to work, providers will need to participate. Hospitals and other providers are offering pushback, wary of further expanding Medicaid since it reimburses at lower rates. How to get them on board? One approach is to offer a higher rate, such as the Medicare rate. But having more people insured in the community also means more utilization and less charity care and less bad debt for providers.
Even states with traditional, non-expanded Medicaid have a potential buy-in path. They could employ a 1902(r)(2) waiver, which allows a state to use less restrictive income determination methods, and has been used to qualify otherwise ineligible seniors in states with income caps, to get rid of the income and asset requirements.
Illinois has a head start, because we expanded Medicaid. The state could choose an “exchange model,” creating a state-sponsored health coverage option consumers that can purchase alongside commercial insurance on Get Covered Illinois, the state’s marketplace. Another option is for Illinois to create a stand-alone Medicaid buy-in by using a 1332 route to waive income eligibility limits. A constraint of the 1332 approach, however, is that it must be budget neutral, and adding many more people to the rolls would carry a price tag. One tactic to address this is to employ an 1115 waiver in conjunction with the 1332, in what is called a “super waiver.” The 1115 would funnel funding into program changes, freeing up Medicaid dollars to include additional populations in the individual market. Other states are considering this strategy.
Governor-elect Pritzker has pledged to give every Illinois resident a chance to buy low-cost health insurance – a promise that echoes Illinois’ AllKids program that provided coverage for all children – and went further to say the public option would come at no net cost to taxpayers. Days after the election, he convened the Healthy Children and Families Committee to study expanding access to healthcare. Chaired by state Sen. Heather Steans, a longtime vigorous healthcare access advocate, the committee will study a Medicaid buy-in.
Is a public option a good idea for Illinois? We think so. A quarter of state residents already have Medicare coverage, and the commercial market is in disarray. Small businesses have really struggled to provide coverage, and this could help.
The table is set for you, Governor-elect Pritzker – like no other governor before you, you have many of the pieces of the puzzle already in place. It’s time for us to do something bold that will help people and the small businesses who have struggled to find affordable, comprehensive health coverage. Both a graduated income tax and legalization will bring in money to help pay for IllinoisCares. Let’s be that state that tops the scale. Let’s be Saskatchewan.
Smart Policy Works, formerly Health & Disability Advocates, provided support to 38 of the 42 states that created Medicaid buy-in programs for working people with disabilities through our technical assistance center, the National Consortium for Health Systems Development.