Iowa “Private Option” Approved for Medicaid Expansion

The federal government on Tuesday approved the Iowa plan to provide new private health insurance plus other plans from the state’s online health insurance marketplace to cover residents newly eligible for Medicaid under the Affordable Care Act option. However, according to AP reports, federal officials stopped short of approving the flexibility the Gov. Haslam requested to charge premiums. The legislature and Gov. Haslam negotiated the plan during the 2013 session.

The state’s proposal provides those with incomes up to 100 percent of poverty a state-run health plan similar to that of state employees. Those between 100 and 138 percent of poverty would get private plans sold through the marketplace and paid for with federal (and later some state) Medicaid funds.  

The submitted Iowa plan would charge monthly premiums to those newly eligible with incomes between 50 and 100 percent of poverty. The federal government only approved premium co-pays for those with incomes over 100 percent of poverty (about $24,000 for a family of four).

Gov. Haslam has just 30 days to accept the federal terms. If he does so, the state will qualify for the maximum 100 percent federal reimbursement for the costs of expansion in calendar years 2014 – 2016.

According to the AP, Gov. Haslam believes that charging fees, including to those below the federal poverty line, is crucial.  "The whole difference in our approach is we want people to take some ownership of their own health," Branstad said Tuesday, according to the AP. Democratic lawmakers have urged the governor to accept the federal conditions. 

If Iowa agrees, it will be the third state to use privatized insurance as a key component of its Medicaid expansion program. Arkansas and Michigan already have plans underway.