MedicaidThree States' Experiences in Buying Employer-Based Health Insurance Gao ID: HEHS-97-159 July 25, 1997
The states are required to pay the premiums, deductibles, and coinsurance for Medicaid-eligible persons with access to employer-based health insurance if doing so saves money for Medicaid. GAO reviewed efforts by three states--Iowa, Pennsylvania, and Texas--to meet this requirement and found that enrollment and cost savings have so far been relatively small. This report discusses (1) the extent to which selected states are purchasing employer-based health insurance for Medicaid-eligible persons and achieving budgetary savings, as well as the potential for greater savings; (2) the cost-effectiveness criteria these states use and the populations and services covered; (3) the outreach efforts used and barriers hindering states' implementation of section 1906, which Congress added to the Social Security Act; and (4) legislation proposed to improve states' efforts.
GAO noted that: (1) Iowa, Pennsylvania, and Texas are recognized as operating aggressive Health Insurance Premium Payment (HIPP) programs, the number of people enrolled in their programs and their reported cost savings are relatively small; (2) the three programs are trying to identify and enroll more Medicaid eligibles, and state officials anticipate enrollment increases in the future; (3) even with the expected increases, however, the programs are expected to remain small when compared with the total Medicaid populations in the three states; (4) in assessing the cost-effectiveness of purchasing employer-based insurance for Medicaid eligibles, Iowa, Pennsylvania, and Texas use criteria designed to enroll anyone whose expected Medicaid costs exceed the total of the premiums, deductibles, expected coinsurance, and program administrative costs; (5) the three states do not target their programs to only those populations with high-cost medical conditions, such as acquired immunodeficiency syndrome (AIDS) patients, because program officials believe this would limit potential cost savings; (6) for example, Iowa officials reported a HIPP program caseload composed primarily of families with children; (7) HIPP program outreach and enrollment efforts in the three states rely primarily on Medicaid eligibility workers to identify those potential enrollees with access to employer-based insurance; (8) the enrollment process, including the assessment of cost-effectiveness, also relies on the cooperation of Medicaid eligibles and their employers to provide needed information, such as health plan costs and benefits; (9) a variety of barriers, however, limit the states' effectiveness in identifying and enrolling Medicaid eligibles; (10) Medicaid eligibles do not always disclose their access to insurance coverage, and employers do not always respond to states' requests for information on health plans; (11) state Medicaid officials and health policy analysts have proposed legislative changes to address some of these barriers and improve HIPP program implementation throughout the country; (12) proposals have been made to require greater employer cooperation in enrolling Medicaid eligibles and parents of Medicaid-eligible dependents; and (13) another proposal is to require that employers and insurers allow HIPP applicants to join employers' health plans at the time Medicaid eligibility is established rather than having to wait for an open enrollment period limited to a certain time of the year.