Welcome back to another edition of our #Advantage blog segment. This is where we answer the questions that we get on social media. As some of you know, our official Twitter hashtag is #Advantage and you can catch up with us here: www.twitter.com/Advantage (or at @Advantage).

This week we had a question from Jill Pederson (@Jill_Ped) up in Oregon. If you’ve followed healthcare reform closely, you’ll know that Medicaid programs were significantly expanded because of the Obamacare law. Expansion is based on FPL (or Federal Poverty Level). Here was Jill’s question:

Let’s start with a short history: back in the summer of 2012 the Supreme Court of the United States upheld the “individual mandate,” and also ruled that individual states have the option to either “opt in” or “opt out” of expanding their state Medicaid program. As of 2014, 27 states (including the District of Columbia) have expanded their Medicaid programs. That’s over half of the nation (here’s a great infographic from Families USA). 

The question is: What’s the long term price tag of Medicaid expansion? Well if you know much about Medicaid, you’ll understand that it’s a joint state/federal program. So depending on the state you’re in, the price-tag is going to vary… sometimes considerably. Here two of the bigger common factors that will affect costs:

  • Utilization of the Medicaid program (ie: the number of people eligible for Medicaid in your state).
  • Whether-or-not your state decided to expand Medicaid under the federal reform law.
  • …plus others.

And if you’d really like an in-depth explaination, here are the details from the Kaiser Family Foundation: Why does Medicaid Spending Vary Across States: A Chartbook of Factors Driving State Spending. The Kaiser Family Foundation utilizes the “Urban Institute’s Health Insurance Policy Simulation Model (HIPSM)” to provide national and state-by-state estimates of the impact of the ACA on federal and state Medicaid costs.

Here’s the answer to Jill’s question regarding the long-term price of Medicaid for individual states (based on HIPSM’s model): “The Medicaid expansion and other provisions of the ACA would lead state Medicaid spending to increase by 76 billion dollars over 2013-2022 (an increase of less than 3%). Some states will reduce their own Medicaid spending as they transition already covered populations to the ACA expansion.” 

It’s the federal government that’s going to take on most of the bill regarding the expansion. The federal government will pick up 100% of the cost of covering people made newly eligible for Medicaid during the first three years (2014-2016), and no less than 90% on a permanent basis. According to the same HIPSM model:  “Federal Medicaid spending (from 2013-2022) would increase by 952 billion dollars (a 26% increase).”

Here are four important points:

A) What do the proponents of Medicaid expansion say?: Those in favor say that it will reduce the amount of uninsured people, while reducing costs. Many formerly uninsured will be covered, and the general public will take on less of a burden when having to compensate for unpaid medical bills of the uninsured.

B) What do the opponents of Medicaid expansion say?: Those opposed say it’s too expensive, over-reaching, and unaffordable. In order to pay the bill (especially at the federal level), taxes will have to go up. Additionally, some are still skeptical about whether-or-not raising taxes will even be enough to pay the bill.

C) What’s going to happen?: That’s the billion dollar question. Obviously you can speculate, but you can’t predict the future. Optimistically you want to say it’s going work, but technically is still “TBA” (To Be Announced).

D) What IS happening?: Generally speaking, those states that have expanded Medicaid in 2014 are seeing some short-term success. The question though is long-term: will it be affordable and sustainable? Again, TBA.

Thanks for stopping by at our “#Advantage” blog segment dedicated to questions from our social media friends. We hope you found our information to be valuable.

We’ll continue to roll-out answers as questions come in. Don’t forget to hash-tag “#Advantage” at Twitter, and visit our official tag here: www.twitter.com/Advantage.

Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

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Today we’re going to look at “private health insurance exchanges.” This has been one of the biggest “buzz phrases” in the health insurance industry over the past couple of years for a number of different reasons. The biggest reason though, is healthcare reform. With the implementation of new provisions required in the Affordable Care Act, the way that employers offer health insurance to their employees is changing.

We’ll take a look at the structure of private health insurance exchanges. We’ll also describe the different components that make-up a private health insurance exchange, the types of businesses that should be taking the closest look at these exchanges, how private exchanges work, and why they’re growing in importance.

Private health insurance exchanges are exactly what they say they are: they’re exchanges that are set up privately through an employer. Many private health insurance exchanges utilize two important components:

  1. Technology and software: software programs help facilitate administration of private health insurance exchanges. Technology keeps private exchange administration simple for both the employer and the employee. One example is www.liazon.com. Liazon’s platform allows an employer to define a contribution (much like an allowance), and then employees select their own health benefits. Simply, it’s an employee’s money to spend how he/she wants. The software keeps track of funds spent, shows the employee what kind of health insurance options are available in the private exchange, and allows employees to select the plans they want.
  2. Group health insurance plans: in the past, many employers only offered one group health insurance plan. Administration of multiple plans could be a challenge. So to fix that problem, software companies (like Liazon) have arrangements with insurance companies that allow the employer to more easily offer multiple group health insurance plans, from multiple carriers. The important word here is multiple. With the software and technology that’s available, it’s not nearly as difficult to offer a selection of group health insurance plans anymore. This is important because one of the biggest goals of private health insurance exchanges is to provide choice. By utilizing a private exchange, employees now have choice.

There are additional ways to set up private health insurance exchanges, but businesses with +50 full time equivalent employees will almost always be utilizing the two concepts we’ve described above. And that’s who this article is intended for: businesses that are mandated to provide coverage. However, smaller businesses can also utilize this exact same strategy. If you’re a business that is at 20 employees or above, you’ll want to understand this concept.

Question: Why are private health insurance exchanges becoming more important?

Here’s why:

  • Private health insurance exchanges give employees choices. Instead of being “stuck” in one group health insurance plan, they can more efficiently choose which plans fit them best. Having choices is now more important than ever before, because dependents (spouses and children) need to have affordable access to coverage. In the past, sometimes it was flat-out too expensive for an employee to include their dependents. The private exchange concept helps alleviate that issue.
  • Businesses with +50 full time equivalent employees are mandated to provide coverage. A private exchange is a cost-effective and budgetable way for employers in the “large group” category to provide coverage. You decide on the amount (called a “defined contribution”), and then give that amount to each employee. They pick the plan they want. Simple.
  • Efficiency. If employees are making their own decisions and picking their own plans, the whole system becomes more efficient. Instead of you telling them what they get, they instead pick what they want. When consumers are making their own decisions, they’re more conscience about where money is being spent.

That’s the basic break-down of private health insurance exchanges. Unlike public health insurance exchanges (ie: state & federal exchanges), private exchanges are completely administered within the private workplace.

As mentioned, private exchanges can be an exceptionally important concept for those businesses in the +50 employee range. They accomplish three very important things: budgetability, selection, and flexibility. Those qualities will be very significant to businesses that are mandated to provide coverage. However, this same concept can work very well for smaller businesses too (in the 2-100 employee range).

We work with private health insurance exchanges at Policy Advantage Insurance Services. If you are an employer that fits into the “group-sizes” we’ve described, contact us anytime if you have questions.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: http://www.policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

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