Special Edition-Manatt on Medicaid: Medicaid Premium Assistance for Employer-Sponsored Insurance
ByDeborah Bachrach, Partner, Manatt | Elizabeth Osius, Manager, Manatt Health
Editor’s note: By bringing millions more Americans into the healthcare system, Medicaid will play a central role in shaping the strategies and plans of all healthcare stakeholders, from states to providers to payers to life sciences companies. Recognizing the importance of a growing and changing Medicaid in shaping the new healthcare environment, the Medicaid team at Manatt will be producing a series of briefs—Manatt on Medicaid—throughout the year. The second edition, summarized below, focuses on the reawakened interest in Medicaid premium assistance for employer-sponsored insurance. Click here to read the full brief.
Did you miss the first issue of Manatt on Medicaid, spotlighting the top-ten trends driving Medicaid transformation? Click here to download a copy.
The Medicaid expansion under the ACA has triggered a renewed interest in the Health Insurance Premium Payment (HIPP) program, a longstanding option for states to use premium assistance to subsidize employer-sponsored insurance (ESI) for Medicaid-eligible individuals and their families. With the income threshold for Medicaid increasing, states expect more Medicaid-eligible adults to be employed and have access to ESI, thereby making the HIPP option particularly meaningful.
HIPP is attractive to state Medicaid programs for a number of reasons. First, it prevents the crowd-out of private coverage that occurs when Medicaid-eligible employees drop or decline coverage offered by their employers in favor of Medicaid coverage. Second, it provides a less costly alternative to full Medicaid coverage for states, while ensuring individuals receive all the protections of Medicaid. Third, it mitigates churn as individuals’ incomes fluctuate above and below Medicaid levels, permitting them to maintain the same plans and providers. Finally, HIPP enables providers to keep their patient relationships and continue receiving commercial-level reimbursement rates.
Implementing HIPP presents several operational issues. Key challenges include identifying eligible enrollees; determining cost effectiveness; and implementing the Medicaid wraparound to ensure the most efficient mechanisms are in place for paying premiums, subsidizing cost sharing and ensuring HIPP enrollees have access to the full range of Medicaid benefits.
The complexities of executing a mandatory HIPP program, indeed any HIPP program, have deterred many states from adopting this option. However, as more states expand their Medicaid programs to individuals with incomes up to 138% of the FPL, the interest in the HIPP option is growing as a way for both providers and states to achieve the dual goals of delivering continuous care and realizing cost savings.