Some states implement HSAs for Medicaid expansion News added by Benefits Pro on July 24, 2014

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By Dan Cook

Some states are tinkering with the federal government’s Medicaid expansion program by using it to force new Medicaid patients to pay for and invest in their own health coverage.

As reported by NPR, the states of Michigan and Indiana have already implemented Medicaid expansion programs that require copays of participants, and strongly encourage them to invest up to $25 a month in what is essentially a health savings account from which they will pay part of their own medical expenses.

Indiana’s Medicaid program differs from Michigan’s in that it was established in 2008 as the Healthy Indiana plan, and has essentially been granted a waiver by the feds to continue as is. Because of its design, Indiana’s plan doesn’t offer the same range of benefits to new Medicaid enrollees under the federal expansion option.

Following on the heels of Michigan and Indiana, Arkansas has now waded into the copay/investment waters. NPR said that, in 2015, Arkansas will require many of its new Medicaid beneficiaries “to make monthly contributions to so-called Health Independence Accounts. Those who don’t may have to pay more of the cost of their medical services, and in some cases may be refused services.”

NPR summed up the yea/nay responses this way: “Supporters say it will help nudge Medicaid beneficiaries toward becoming more cost-conscious health care consumers. Patient advocates are skeptical, pointing to studies showing that such financial ‘skin-in-the-game’ requirements discourage low-income people from getting care that they need.”

The theory is pretty straightforward: Folks who want the Medicaid coverage will have to agree to pay for some of the cost, and they can either invest 2 percent of their annual income in an HSA or face penalties, such as higher copays or lack of access to certain services.

Exactly how this will play out is yet to be seen. NPR notes that these attempts to make Medicaid covered individuals “more cost-conscious health care consumers” add yet more layers to an already Byzantine healthcare structure. Additionally, these state tweaks of the expansion program tend to be at odds with the intent of the program, which was to offer real health care options to folks who generally don't have access to it.

“At least 40 states charge premiums or cost sharing for at least some beneficiaries,” NPR reported. “These beneficiaries already have skin in the game, advocates say, and they question the value of these special accounts that add a whole new layer of complexity for people who may not ever have had insurance before.”

Readers of the NPR article were generally appalled that states were essentially forcing poor people to shell out money for basic health coverage. As one reader commented: “What is going on in this country? People are already screened for Medicaid. Do we have to punish them like dogs? A good smack on the nose with a newspaper will teach them who’s boss, right?!! Make Welfare recipients dance a little jig for our amusement. They aren’t shamed enough!”

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