Obamacare will add a projected 9 million individuals to Medicaid in 2014 by expanding the program to able-bodied adults below 138 percent of the Federal Poverty Level. Unfortunately for these new Medicaid enrollees, much of the coverage offered in the Obamacare exchanges will look a lot like Medicaid, with patients having access to a limited number of doctors and hospitals.
In fact, a recent analysis of health insurer participation in the Obamacare exchanges by Heritage Foundation Senior Fellow Ed Haislmaier finds that 20 percent of all the health insurers offering exchange coverage have Medicaid managed care as their current principle business.
One likely explanation is that because the incomes of many individuals fluctuate above and below the threshold for Medicaid eligibility, Medicaid managed-care insurers that participate in the exchanges will be better positioned to retain those enrollees in their plans.… The other possibility is that this subgroup of carriers actually views offering exchange coverage as an attractive business opportunity in its own right.
As the accompanying table shows, Haislmaier finds that
among the 36 states and the District of Columbia that operate part of their Medicaid programs through managed-care plans, nearly half (49.5 percent) of the carriers participating in their exchanges operate Medicaid managed-care plans in the state. Indeed, in 28 instances Medicaid managed-care accounts for over 90 percent of the carrier’s current business in the state.… 31 states will have at least one insurer with Medicaid managed-care business in the state offering coverage on the exchange, and that in 18 states half or more of the insurers in the state’s exchange currently have Medicaid managed-care business.
In six states Medicaid managed care is the principal current business of half or more of all exchange carriers—six of the 11 in Texas, three of the five in New Mexico, two of the four in Indiana, and one of the two each in Delaware, Mississippi and Rhode Island.
Haislmaier concludes that
a number of insurers with Medicaid managed-care business saw in Obamacare’s exchange subsidy design an end result that looks a lot like Medicaid managed care—and thus, decided to offer coverage on the exchanges. It is a business model that they already know how to successfully implement. Indeed, Molina’s CEO was recently quoted in the Miami Herald explaining that “Medicaid is essentially an individual market for low-income patients…and Medicaid has premiums that are paid for by the state. The reason we went after the exchange is we feel there are a lot of similarities.”
Like Medicaid, the coverage offered in the Obamacare exchanges will be heavily subsidized. But also like Medicaid, it will, in many cases, provide access to a limited number of doctors and hospitals. The Obamacare exchanges are essentially offering Medicaid for the middle class.
Louis Phillips is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.