HHS guidelines for privatized Medicaid expansion

The Department of Health and Human Services issued a FAQ on Friday regarding its receptivity to state proposals, like the one floated by Arkansas, to use the federal funds for Medicaid expansion through the ACA to offer private insurance through the ACA exchanges to Medicaid-eligibles.

HHS points out that outside the ACA expansion, states already can use Medicaid funds to buy private coverage  (mostly through private group health plans) for Medicaid recipients, provided that the plans are deemed "cost effective" -- that is, "that Medicaid’s premium payment to private plans plus the cost of additional services and cost sharing assistance that would be required would be comparable to what it would otherwise pay for the same services."

The new departure would be using federal money to buy qualified health plans on the new ACA exchanges for those covered by the ACA's Medicaid expansion. It's important to note the context in which HHS will consider "demonstration projects" of this sort: it will do so to "inform policy for the State Innovation Waivers that start in 2017."  In 2017, states can apply to "pursue their own innovative strategies to ensure their residents have access to high quality, affordable health insurance" providing the proposed plan