Despite years of political fighting and infighting, Congress remains at an impasse over how to fix our healthcare markets. That’s because no single healthcare law will suit 325 million Americans. There are too many differences in health conditions and market conditions, in problems as well as resources and opportunities. As Gov. Brian Kemp noted, waivers offer the best way to improve matters for Georgia’s patients, providers and taxpayers.
Two types of waivers exist. One tailors the Medicaid program, and one tailors the premium tax credit assistance for individuals buying insurance under the Affordable Care Act.
The Legislature has authorized Kemp to seek a waiver to offer Medicaid to Georgians earning up to 100% of the poverty level. Often, these individuals’ care already is subsidized, by mandated care at hospital emergency rooms and through higher private insurance premiums that offset provider losses.
Subsidies would still be needed if Georgia simply added them to Medicaid: On average, Medicaid pays providers less than the cost of care. Because providers still lose money on many of these patients, this approach will not save rural hospitals. Worse, the low reimbursement rate means many providers don’t accept Medicaid. This limits access to care, which matters more than coverage.
With a waiver, Georgia could enroll some patients in private plans and fund accounts from which they pay out-of-pocket expenses and, ideally, aggregate contributions from other sources such as employers, family and charities. The state could contract with a provider at a flat, per capita rate to cover others in an exclusive network; this is essentially the oft-discussed “Grady waiver.”
Why not simply expand Medicaid under the ACA? First, Georgians between 100-138% of the poverty level are eligible for subsidies on the individual exchange, HealthCare.gov. For them, it is not either Medicaid or nothing. Second, it is smarter to offer them private insurance, which has greater access to care, with an ACA waiver.
The Trump administration has outlined ways states could use ACA waivers. States could create a reinsurance program or a high-risk pool; either would directly and more efficiently subsidize care for the relatively few people responsible for much of healthcare spending. Some states with these programs have seen individual-market premiums fall by double-digits.
The second type of innovation involves accounts. Currently, premium assistance tax credits must be spent on insurance premiums. That may leave buyers with a plan that doesn’t cost them anything – until they go to the doctor and find they face a large deductible.
With an account-based system, beneficiaries could choose to spend the entire subsidy on premiums, or perhaps buy a less expensive plan and retain the rest of their subsidy for out-of-pocket expenses. It is similar to a Health Savings Account.
The third type of innovation is allowing subsidies to cover more products, such as direct primary care services paired with indemnity plans or catastrophic-coverage insurance. That is probably Georgia’s best chance to lower healthcare costs.
In short, waivers are a potentially powerful tool for Georgia to take charge of its own healthcare market.
Kyle Wingfield is president and CEO of the Georgia Public Policy Foundation. He is a former columnist for the AJC.
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