ACA’s welfare-based means testing adds program complexity, risk for error

According to a Government Accountability Office report released Thursday, some individuals received subsidies to help them purchase exchange coverage while they were also enrolled in Medicaid. According to Carolyn Yocom, a director of health care studies at GAO, the duplicate coverage could mean the federal government is “paying twice — subsidizing exchange coverage and reimbursing states for Medicaid spending — for individuals enrolled in both types of coverage.”The House is expected to hold a hearing on the issue on Friday (Pear, New York Times, 10/22).The report noted that an estimated seven million U.S. residents have changing incomes that likely qualify them for Medicaid at some times and for the ACA’s subsidies at others. According to the report, it is difficult for the federal government to differentiate between the eligibility groups (Howell, Washington Times, 10/22). Further, the report noted that CMS “does not have procedures to automatically terminate subsidized exchange coverage when individuals are determined eligible for Medicaid.”

Source: GAO Finds Federal Gov’t Paid for Duplicate Coverage Under ACA – California Healthline

While broadening health coverage for Americans under age 65 not covered by predominant employer-sponsored health coverage, the Patient Protection and Affordable Care Act is not exactly seamless in its approach, leading to the kinds of problems the GAO identified. Largely because of its complexity in using monthly household income — the traditional means test for state welfare eligibility — and siloed forms of coverage.

The first seam is at 100 percent of household federal poverty level (FPL) — the minimum income in order to be eligible to purchase subsidized coverage on state health benefit exchanges. Then come six income tranches that determine the amount of the subsidy, topping out at another seam — 400 percent of FPL — above which subsidies are no longer available. Overlaying these at the lower household income range is yet another seam in states that have opted to expand Medicaid — a household income of 138 percent of FPL. With many lower income households frequently moving back and forth across this seam, it’s easy to see how state health benefit exchanges would be hard pressed to keep track to ensure these households are in the correct program at all times.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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Frederick Pilot

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