Lessening the Impact of Coverage Churn Through Multimarket Health Plans
Americans obtain health coverage in many ways. The two most important health insurance pathways for low- and moderate-income people are Medicaid and tax subsidies for private plans, which are available through the Affordable Care Act’s marketplaces. These two forms of subsidized coverage are supposed to work in tandem, limiting problems such as breaks in coverage or repeated transitions to new health plans, which arise from the income fluctuations experienced by lower-income individuals and families during the year. But churning between coverage sources remains a challenge.
One study has estimated that over the course of a year, 50 percent of adults with incomes below $23,540 for an individual (twice the federal poverty level) will move between subsidized private marketplace plans and Medicaid at least once, and that one of four will change more than once.1 Although Medicaid/subsidized private plan churn is more likely in states that expand eligibility for Medicaid under the Affordable Care Act, people will experience Medicaid-to-marketplace churn even in states that opt out of the Medicaid expansion, as their incomes fluctuate and their life circumstances change.2
While making sure people can enroll in or renew their Medicaid and marketplace plans through a single entry point would reduce breaks in coverage, it would not address the fact that insurers sell different health plans, with different rules and health provider networks, in the Medicaid and exchange markets. This may affect continuity of care, thereby undermining the Affordable Care Act’s deeper aims of health care quality and efficiency improvement. For this reason, there has been interest in insurers that offer complementary health plans, using a common provider network, for both Medicaid and the marketplaces. Such a strategy could protect people from the health care consequences of what really is only a different source of financial support as they move from one form of subsidized coverage to another.
The Association for Community Affiliated Plans reported in 2013 that 41 percent of qualified health plan issuers also offered Medicaid plans in the same state market. To better understand the potential for such “multimarket” health plans, we conducted a study in which we interviewed officials from nine insurance companies already involved in or contemplating multimarket plans.
What We Found
Our research, published in the February issue of the Journal of Health Politics, Policy and Law,3 produced several notable findings:
- Developing a multimarket presence made sense to these companies because they were oriented to lower-income consumers and understood that churn was not only bad for health care but also bad for business. Given the investments they were making in getting customers, they did not want to lose them. Companies that already had a major presence in Medicaid managed care were especially sensitive to the problem of churn.
- Company officials also reported challenges in designing qualified health plans that would work for the target customer base. Companies knew that they had to keep premiums as low as possible. But they also realized that cost-sharing would have to be kept low and reported efforts to negotiate provider payment discounts, a strategy that deterred participation by providers that expected to be paid commercial rates.
- Officials reported that dual oversight systems and certification requirements (one for the exchange, the other for Medicaid) were not in and of themselves major barriers, thereby easing concerns that an inconsistent regulatory climate would act as a barrier to market entry.
Our research suggests that multimarket participation offers a viable means for mitigating the impact of churn. What might be done to enhance its growth? To begin, both Medicaid agencies and marketplaces might award points for multimarket participation with shared networks in health plan quality ratings systems made available by Medicaid programs, and ultimately the marketplaces, to help consumers select plans. Medicaid agencies might also give bonuses to companies that maintain a multimarket presence to enable them to improve the competitiveness of their Medicaid provider payments. Furthermore, both marketplaces and Medicaid programs might develop enrollment assistance information that provides understandable information on which companies offer plans with common networks in both markets and stresses the importance of selecting a company that enables patients to maintain continuity of care, even as income or life circumstances cause changes in the source of subsidy.
Finally, we will need to evaluate multimarket participation’s impact on continuity, quality, and access to help shape future policy. Of key importance will be the success of companies offering multimarket plans in persuading provider networks to participate in all plans, even if payments are more deeply discounted. This would help establish and maintain plans with reasonably low cost-sharing and a provider network that offers members continuity of care, even if their subsidy sources fluctuate.
1 B. D. Sommers and S. Rosenbaum, “Issues in Health Reform: How Changes in Eligibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges,” Health Affairs, Feb. 2011 30(2):228–36.
2 B. D. Sommers, J. A. Graves, K. Swartz et al., “Medicaid and Marketplace Eligibility Changes Will Occur Often in All States; Policy Options Can Ease Impact,” Health Affairs, April 2014 33(4):700–7.
3 S. Rosenbaum, “Addressing Medicaid/Marketplace Churn Through Multimarket Plans: Assessing the Current State of Play,” Journal of Health Politics, Policy and Law, Feb. 2015 40(1):233–42.