Report: Overlap Issuers Could Narrow Coverage Gaps, Mitigate Churn

By Margaret A. Murray, CEO and
Jennifer Mcguigan Babcock, VP for Exchange Policy
Association for Community Affiliated Plans

Last month, our organization – the Association for Community Affiliated Plans (ACAP) – issued a study that found that about 4 in 10 organizations offering coverage through Qualified Health Plans (QHP) in Health Insurance Marketplaces operate a Medicaid managed care plan in the same state.

As we’ve noted previously, we at ACAP are particularly interested in health plans that provide coverage in the Medicaid and Marketplace environments in the same state. These plans, which we dub ‘overlap issuers,’ represent an opportunity for consumers with low incomes to select a source of coverage that may remain continuous, even if their incomes rise above the threshold for Medicaid eligibility. These plans can also provide a single source of coverage to families with ‘split eligibility’—where parents may be eligible for subsidized Marketplace coverage, while their children qualify for Medicaid or CHIP.

Labor Department statistics peg the unemployment rate at 5.5 percent for February, down from 10 percent in October 2009. It’s terrific that the improving economy is lowering unemployment. But one byproduct of rising incomes is that many workers and families will shift from Medicaid coverage to the subsidized Marketplace coverage. Changing health plans can upend long-established care relationships, and in the worst case can result in interruptions of care for people with chronic conditions. Overlap issuers can ease the transition, as many offer similar provider networks and customer service contacts.

Our study found that 131 of 338 QHP issuers, or 39 percent, are ‘overlap issuers’—that is, they also offered a Medicaid managed care plan in the same state. Thirty-three states house at least one overlap issuer. However, the distribution of such issuers is highly uneven: a new county-by-county analysis drawing upon data from McKinsey & Company’s Exchange Offering Database shows that consumer choice is more limited than state-level data would imply.

Screen Shot 2015-03-23 at 1.33.50 PMTake, for example, Texas. The State features 15 QHPs and ten overlap issuers. But county-level data show that each of Texas’s 254 counties offer fewer choices in practice (Figure 1).

  •  – 12 counties offer three overlap issuers,
  •  – 13 counties offer two overlap issuers,
  •  – 113 counties offer one overlap issuer, and
  •  – 116 counties offer none.

Like many states, Texas has yet to expand its Medicaid program, making a continuous source of health coverage even more difficult for adults who find work and transition off the Medicaid program.

New York, in contrast, is in better shape: only two counties lack any overlap issuers at all, and the five boroughs of New York City and surrounding areas offer their residents five or more overlap issuers to choose from. But many New Yorkers, especially upstate, have limited choices: more than one-third of the State’s 64 counties have one or zero overlap issuers.

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How can we maximize the benefits of “overlap” issuers? 

Make overlap issuers easy to find. Many overlap plans can be difficult for consumers to identify as their plan names may differ between Medicaid and the Marketplace. ACAP has long advocated that overlap plans be identified by an icon or other means on Marketplace web sites, making it easier for consumers to find them.

Adopt the “Bridge” Plan. This policy would allow any Marketplace to include Medicaid and CHIP health plans serving only enrollees who move into the Exchange from Medicaid and families with split eligibility. This would allow these plans to continue to cover those individuals and families only. However, these same individuals and families could select a different QHP in the Marketplace rather than remain with their Medicaid or CHIP plan. Plans, of course, could still be certified as a QHP by a given Marketplace and serve all comers.

Twelve-month continuous enrollment. Congress is currently considering legislation that would mandate twelve-month continuous enrollment for Medicaid and CHIP beneficiaries which would bring coverage in these programs on par with private coverage and Medicare prescription drug coverage for people with low incomes, minimizing the number of times that a transition may be necessary.

Legislation in both Houses of Congress would make this a reality. Representatives Gene Green and Joe Barton have introduced H.R. 700, the Stabilize Medicaid and CHIP Coverage Act, which provides 12-month continuous enrollment for all Medicaid and CHIP enrollees. Senator Sherrod Brown has introduced similar legislation—S. 428, the Stabilize Medicaid and CHIP Coverage Act—in the Senate. In addition to twelve-month continuous enrollment for people eligible for Medicaid and CHIP, it would provide financial incentives to states to reduce churn in the Medicaid and CHIP programs.

The Affordable Care Act established an environment wherein most individuals have options of coverage regardless of income. Millions of individuals are expected to shift between Medicaid and the Marketplaces, so a significant remaining challenge is to ensure continuity and coordination of coverage as this occurs. A robust choice of overlap issuers in the Marketplace, along with the policies described above, will provide an array of options to ensure that the Affordable Care Act works for lower-income populations.