Low-income workers may get Medicaid money to buy their own insurance

(Bloomberg) -- Low-income people may get Medicaid money to buy health insurance from private plans such as UnitedHealth Group Inc. or Humana Inc. in a “limited number” of states, the U.S. said last week.

Arkansas and Ohio have asked President Barack Obama’s administration to allow them to adjust how Medicaid dollars are used. The U.S. Centers for Medicare and Medicaid Services said last week it would allow an unspecified number of states to do this as long as it doesn’t cost the government more than the traditional Medicaid program.

The plan is a departure from the 2010 Patient Protection and Affordable Care Act, which calls for an expansion of government-run Medicaid, the health program for the poor. Under the health law, about 12 million people are expected to be added to Medicare’s rolls by 2020 as the program grows to cover people earning as much as about 138% of the federal poverty level, or about $32,500 for a family of four.

“We remain committed to working with states and providing them with the flexibility and resources they need to build new systems of health coverage,” says Cindy Mann, the agency’s Medicaid director. “Premium assistance is simply one option.”

Arkansas Gov. Mike Beebe, a Democrat, received informal approval on Feb. 18 from Kathleen Sebelius, the U.S. Secretary of Health and Human Services, for a proposal to use money for the Medicaid expansion to instead buy private coverage for low-income people in the state’s new insurance exchange.

The state’s Medicaid director, Andy Allison, said in an interview that he hopes to receive approval for the plan from Mann’s agency soon.

Ohio Gov. John Kasich is negotiating a similar plan for his state with Mann’s agency. Republican lawmakers in other states including Florida and Tennessee have expressed interest, and are waiting on the outcome of the Arkansas and Ohio negotiations, says Matt Salo, executive director of the National Association of Medicaid Directors in Washington.

“Everybody else is sort of saying, ’we’re going to watch this,”’ Salo says. “If Arkansas and Ohio can’t figure this out, they’ll reevaluate.”

Mann’s agency says in the question-and-answer document that states can include in their proposals savings they may gain by adding more people to exchanges.