In my home state of Oregon, we have focused on improving and transforming our Medicaid benefit system over the last five years. Medicaid is government-supported health insurance for economically disadvantaged individuals. Under the Affordable Care Act, Oregon increased the number of Medicaid beneficiaries from 600,000 to nearly 1 million in just a short time.
Oregon’s uniquely successful Coordinated Care Organizations developed as a new transformative way to deliver Medicaid benefits to all recipients and has demonstrated both financial and clinical success in serving its population. Annual cost increases have been held to under 3.4 percent for five years in a row for Medicaid. Additionally, quality of care and outcomes have improved with more than 90 percent of Medicaid members now receiving care through a high-functioning recognized medical home.
For many, especially the adults benefiting from the ACA expansion, Medicaid serves as a valuable safety net to grant access to quality care whilst avoiding medical bankruptcy. As a result of these benefits, individuals can participate in the workforce, earn an income, and potentially move off of Medicaid as their income increases beyond 138 percent of the Federal Poverty Level which currently qualifies individuals as Medicaid eligible. Medicaid functionally works as a hand up for many Americans. A hand up to the opportunity, employment and higher wages.
After leaving Medicaid, individuals may gain health insurance benefits from an employer or may need to purchase it on the individual exchange if they are not offered benefits. As one climbs the income ladder out of poverty and out of Medicaid, the slope to prosperity remains steep. Purchasing individual health insurance may still be well out of reach for many in lower income brackets just barely above the threshold for Medicaid qualification.
“Medical bankruptcy…is the number one cause for bankruptcy in the United States.”
The subsidies offered to low-income individuals to purchase insurance on the individual market and to insurance companies to support this benefit under the ACA, provide the necessary hand up needed to help pull individuals up our prosperity ladder continually. Without this hand, the ladder becomes splintered and broken, forcing those affected to take an inadequate path—after all other options have been exhausted.
One path is to earn less and stay on Medicaid. With the prospect of potentially needing to purchase unaffordable health insurance without a subsidy to support that decision, why would one be motivated to earn more to lose Medicaid status? Suppose you make $200 a month more over the qualifying income level for Medicaid and need to purchase an individual plan. The plan may cost you $1,000 a month. Without the subsidy, you now earn $800 less a month rather than $200 more because of the need to buy health insurance. Without subsidizing insurance companies, they too would not be able to offer coverage at a sustainable price point.
Another path for Medicaid members moving up the income ladder above the income qualification level is to purchase insurance. In this case, the plan selected would likely be a high deductible plan. If you did become sick and needed benefits, you may need to pay a deductible more in excess of $5,000. Where is an individual in a lower income bracket going to get this money? Perhaps a credit card with an interest rate of 20 percent a year, saddling them with another unaffordable burden in addition to their health insurance premium. Quickly, the reality becomes a high potential for medical bankruptcy, which is the number one cause for bankruptcy in the United States.
Without the subsidies, Medicaid will remain the best and often only realistic option for many Americans. The recently eliminated ACA subsidies supported working Americans and their families to move up the income ladder with a helping hand. Cutting off the subsidies cuts off the hand.
Commentary by Jim Rickards, MD, MBA. Rickards is the senior medical director at Moda Health in Portland, Oregon and author of Our Health Plan: Community Governed Healthcare That Works. He was a pioneer in developing the Coordinated Care Model for the state of Oregon as a new way to deliver healthcare services to its nearly 1.1 million Medicaid members. Previously, Dr. Rickards was the Chief Medical Officer of the Oregon Health Authority, where he provided clinical and policy leadership in managing Oregon’s Medicaid population.
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