In a nutshell:
- Michigan began moving individuals who failed to complete a Health Risk Assessment off of the Healthy Michigan Plan—Michigan’s expansion of Medicaid under the Affordable Care Act—and into marketplace health plans.
- These commercial health insurance plans will cost the state substantially more than the Medicaid health plans they are replacing.
- It remains too early to determine what the long-term impacts (if any) of the Healthy Behavior Incentive Program might be on the health of Medicaid Enrollees.
When the Healthy Michigan Plan was set up, the Michigan Legislature wanted program benefits to be temporary and beneficiaries to transition off of Medicaid and into private insurance plans. Because the program was funded almost entirely with federal dollars, however, state policymakers needed to follow federal rules if they wanted to bring federal funding back to Michigan.
In a compromise, the program allowed individuals to remain in a Medicaid health plan only if they completed a series of steps to demonstrate progress on adopting or maintaining various healthy behaviors. Individuals who fail to do so will be transferred to a commercial health insurance plan. This “Marketplace Option” took effect April 1, and applies to Healthy Michigan Plan beneficiaries with incomes above 100 percent of the federal poverty level who: 1) enrolled in a Medicaid Health Plan for 12 consecutive months or more, 2) did not complete a healthy behavior, 3) are not considered medically frail, and 4) who are not considered exempt from cost-sharing.
Last month, in a discussion of prison food contracts, I noted that governments and policy-makers should carefully consider the best (most effective, efficient, and equitable) service delivery model, rather than simply assuming that “private” always means better, faster, and cheaper. In the context of Michigan’s Medicaid expansion, “private” health insurance is an ambiguous concept, since Medicaid health plans are already administered by the various health insurers operating in the state through an effective and successful system of managed care. The State sets the ground rules (along with the federal government) and provides payment, and then utilizes the expertise of insurance companies to manage the care of plan enrollees. Moving these same enrollees into a different insurance product (possibly, if not likely, managed by the same health plan), and using the same Medicaid dollars to do so, appears on the surface to be an arbitrary preference for one mixed public/private delivery model for another.
If the change to commercial insurance is arbitrary, however, it is anything but superficial. It is concerning to see policymakers shifting more individuals (potentially high-risk and demonstrably non-compliant) into an already unstable individual health insurance market that faces continuing threats to stability. Costs are also cause for concern. MIRS news reported in March that $6 million had already been requested to pay for the first six months of the transition period. A cohort of 13,550 Healthy Michigan Plan enrollees were notified that they would need to complete a Health Risk Assessment (HRA) and adopt a healthy behavior, or else be dropped from coverage this month and moved to a marketplace plan. A portion completed the HRA before the deadline, but had the entire cohort been moved to the federal exchange, it could have cost as much as $8.9 million for those 13,550 individuals.
That’s a steep increase, and, with more cohorts being notified each month, the long-term costs are still unclear. On a per-capita basis commercial payers have seen more growth in cost than Medicaid, and per-capita spending in Medicaid is also lower when controlling for greater health needs among Medicaid enrollees. Most of the recent growth in Medicaid spending has been driven by increased enrollment, both because of increased need during economic recessions and broader eligibility due to program expansions). Moreover, because the Medicaid-eligible enrollees being moved to marketplace plans are still considered a Medicaid population, Medicaid rules will constrain any premiums or co-payments (based on an individual’s income) and the state will be left to pay the difference.
Why is Medicaid less expensive? The main factor is the rate of payment to health care providers. Medicaid insurance plans have fee schedules and strict controls on how much a provider can be paid for a service, whereas other plans pay various negotiated commercial rates. Previous research has highlighted that it is less expensive to cover individuals through Medicaid than through commercial insurance products. Moreover, marketplace plans for higher-income individuals who are ineligible for Medicaid have been less expensive in states that insured lower-income individuals by expanding Medicaid.
Some might hope that marketplace plans will lead to better care and improved health outcomes. I do not share this optimism. While there are clear health benefits associated with having health insurance, the source of that coverage appears less important. Due to the variety of health plan designs, differences between various providers, and differences in the general health status of individuals with employer-sponsored health insurance relative to individuals typically enrolled in Medicaid, valid comparisons are nonetheless quite difficult to make.
Even if paying for more expensive insurance likely won’t improve health outcomes, improving health is certainly central to this discussion. Failure of individuals to complete a Health Risk Assessment and adopt healthy behaviors is, after all, what precipitated this transition. In an analysis of the Healthy Michigan Plan last year, the Citizens Research Council discussed challenges with the structure of the Healthy Behavior Incentive program that was contingent upon participation from individuals and primary care providers alike. Completion rates were low initially, and substantial confusion surrounded the new program (that was first voluntary, and then compulsory). Recent communication and outreach efforts have increased HRA completions substantially, however, and most Healthy Michigan Plan enrollees are now complying with the program requirement.
Whether or not innovative policies like the HRA will lead to better health in the long run is another question entirely. In the short term, this particular policy design seems only to have increased costs and paperwork. While the Health Risk Assessment may be admirably geared towards improving the health of enrollees, good intentions do not guarantee good public policy. Programs constructed with the intention of coercing participants into “responsible behavior” may be inherently doomed to fail if they take a one-size-fits-all approach that does not acknowledge the underlying reasons behaviors may differ among individuals and groups.
Numerous factors, known collectively as the social determinants of health (economic conditions, quality of education, availability of social support, etc.), have a profound effect on an individual’s health, as do behavioral patterns that are often habituated and culturally reinforced. The small financial incentives offered to individuals by the Healthy Behavior Incentive Program may be unable to overcome strong social, cultural, and environmental pressures without a more well-defined intervention and case management strategy.
A cynic might see the HRA more as a series of hurdles designed to reduce enrollment in Medicaid than as a serious effort to make people healthier. The increased costs the state now faces because of the way the HRA and “Marketplace Option” policies were designed and implemented should be a cautionary tale as future changes are made to Michigan’s Medicaid program (such as the proposed inclusion of a work requirement that I discussed earlier this year). If we’re going to spend millions more on Medicaid, we should invest those scarce resources in addressing the underlying factors that lead to bad health rather than arbitrarily switching people’s health plans.
Policymakers should nonetheless be lauded for trying new approaches and working to find innovations to improve the Medicaid program. Medicaid should be an active participant in improving health rather than just a passive payer for health care and services; the Medicaid program is increasingly embracing this role, and Michigan has proven itself a leader in this regard. Innovation is necessary if we want to achieve higher quality, more accessible, and less costly healthcare for Medicaid enrollees, and for the rest of us as well; if we’re going to innovate, let’s make sure we get it right and keep health at the center of every Medicaid discussion.