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California could opt to offer Medicaid “bridge plans” on exchange rather than expand Medicaid eligibility

Despite the assumption that California would opt to expand Medicaid eligibility to households with incomes between 100 and 133 percent of federal poverty guidelines as permitted under the Patient Protection and Affordable Care Act, the policy question remains open in the Golden State.  A number of sticking points remain as detailed in this story in today’s Los Angeles Times.  Chief among them is Gov. Jerry Brown’s expectation that since counties would benefit from the expansion through a reduced burden of caring for indigents not currently eligible for Medi-Cal as it’s called in California, they should help Sacramento shoulder the state’s future federal Medicaid cost share.

According to The Times, the Brown administration is also concerned that allowing people to enroll in Medi-Cal online could encourage fraud.  California is rushing to ready an online enrollment system, the California Eligibility, Enrollment and Retention System (CALHEERS), to implement the Affordable Care Act’s mandate that individuals and families be offered enrollment for both government insurance programs like Medi-Cal and private coverage offered through its health benefit exchange thorough a single, streamlined application process.  The unresolved policy question of whether to expand Medi-Cal eligibility poses significant potential to complicate an already complex process to prepare the online system and to provide enrollees what state officials expect to be a customer-friendly “no wrong door” experience.  Problems integrating the state’s legacy Medi-Cal eligibility computer software with CALHEERs have already delayed plans to have it functional by the October 1 pre-enrollment date for 2014 coverage until January 1, 2014.

While the Brown administration’s concerns over expanding eligibility for Medi-Cal have stalled legislation that would do so, the administration is sponsoring pending legislation, SBX1-3, that would authorize commercial Medicaid managed care “bridge plans” per federal guidance issued in December, 2012 for those earning up to 200 percent of federal poverty.  The plans would be available through the state’s exchange marketplace, Covered California.

Since the Affordable Care Act deems households with incomes of at least 100 percent of federal poverty eligible to buy coverage through the exchange marketplace, the bridge plan option provides policymakers an alternative to expanding Medi-Cal eligibility to 133 percent of federal poverty.  Some states that have declined to expand Medicaid eligibility including Tennessee, Arkansas and Oklahoma are negotiating with the federal Center for Medicare and Medicaid Services to obtain waivers to allow their Medicaid eligibles to purchase commercial coverage on their exchanges. Absent a near term political agreement to expand Medi-Cal eligibility, California could soon be among them.

If the trend continues, it could lead to a bifurcated Medicaid system: basic, legacy Medicaid for those households with incomes below 100 percent of federal poverty guidelines and a “super Medicaid” system of federally subsidized coverage for households with incomes above the poverty line that wouldn’t otherwise qualify for Medicaid.  It would also have fiscal implications for the states electing to “expand” Medicaid eligibility via Medicaid bridge plans sold on their health benefit exchange marketplaces since it would reduce their future federal Medicaid cost share burden, shifting subsidization fully to the federal government in the form of advance income tax credits.

California bill aimed at deterring large employers from placing low wage workers on part time status to avoid ACA coverage mandate

California employers with 500 or more workers would be required to pay the state a penalty based on the average cost of coverage provided by large employers for those employees that enroll in Medicaid (Medi-Cal in California) coverage under advancing legislation.

According to an analysis of AB 880 prepared by the Assembly Health Committee, the bill is aimed at deterring large employers with sizable numbers of low wage workers from reducing their hours to less than 30 hours per week in order to avoid the Patient Protection and Affordable Care Act requirement to offer coverage to all workers employed at least 30 hours per week. “The author states this bill is designed to ensure that the largest employers in the state do not evade their responsibilities under the ACA by cutting hours and eliminating benefits so that their employees qualify for Medi-Cal,” the analysis states.  “This shifts costs onto the public and threatens the fiscal solvency of the state.”

As AB 880 moves forward, legislation stating intent to expand California’s Medicaid eligibility under the Affordable Care Act to households earning up to 133 percent of federal poverty level has bogged down over the extent to which counties should share in the cost and the Brown administration’s concern over the long term fiscal impact of the expansion and specifically whether California will remain obligated to honor it if federal cost share funding is cut in the future. Anxiety over Medicaid remains high among the state’s budget writers.  They viewed the state’s Medicaid cost share as a budget buster during years of fiscal shortfalls following the economic downturn that began in 2008.

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