Premium Assistance and Wrapped Benefits: Do They Work?

Author’s note: This is the first in a two (or possibly three) part blog series – the next installment will ponder this question with a particular eye to the future of children’s coverage…

Along with co-authors MaryBeth Musumeci and Robin Rudowitz at the Kaiser Commission on Medicaid and the Uninsured, Sean Miskell and I undertook a study of pre-ACA premium assistance programs to see what we could learn about wrapped benefits to inform post-ACA interest in using premium assistance in Medicaid (think Medicaid expansion approaches like Arkansas and New Hampshire and perpetual interest in red/purple states to “go private”).

The concept of wrapped benefits is important because private coverage generally does not meet Medicaid benefit standards and/or cost-sharing protections. These longstanding Medicaid benefit standards and cost-sharing protections are in place because Medicaid serves a lower income and more vulnerable population that can not afford to cover the cost of uncovered services and often needs a more robust benefits package than private coverage provides.

Q: Real or not real?[1] The Obama Administration has taken the position that states using private coverage approaches for Medicaid expansion must provide all benefits and cost-sharing protections through a wraparound benefit.

A: Mostly real, with the exception of the non-emergency transportation benefit discussed elsewhere on Say Ahhh!.

In any event, back to the new report — we examined long-standing premium assistance approaches in eight states that subsidize employer-sponsored insurance authorized by Section 1906 of the Medicaid statute. These programs are relatively small and available data is limited. But they are important to consider because it appears that states utilizing premium assistance post-ACA like Arkansas are using these programs as their model for implementation of the wraparound benefits.

Here are some of our key findings:

  • Data is limited and further research is needed. Few states report how much is spent on wrap-around benefits and cost-sharing protections in their premium assistance programs which makes it difficult to assess the extent to which beneficiaries are accessing those benefits and whether premium assistance programs are cost-effective.
  • Beneficiary educational materials are inadequate. The clarity of states’ written materials explaining how beneficiaries can access wrap-around benefits varies. States’ written materials do not always clearly convey the availability of wrap-around EPSDT services for children. In fact only one state, Rhode Island, even came close in my view. Federal law requires that states clearly convey the availability of EPSDT to families. Some states’ materials we examined made it sound like the private insurance would likely cover more services than Medicaid, which is unlikely.
  • Cost-sharing protections are only afforded if the beneficiary sees a provider that is in the private plan AND accepts Medicaid. This was a real eye opener for me. Since proponents of using premium assistance generally tout the virtues of better access to providers in private plans, this undermines a key selling point of premium assistance. If the provider doesn’t accept Medicaid, beneficiaries must pay the entire cost of the service out-of-pocket as required by the private plan. Moreover it is unclear from the materials that beneficiaries are fully informed of this in some states.

Check out the full report here and stay tuned for more of my musings on what these findings mean for children’s coverage in particular.

[1] Bonus points for those that can identify the teen fiction trilogy referenced here.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.

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