Medicaid Spend Down Rules and a Health Care Reform Proposal

Abstract

This paper provides an outline and an assessment of a new health care reform proposal. The centerpiece of the new proposal involves the creation of a combined private/public health plan for some eligible individuals. The new health insurance proposal combines a low-expenditure private health plan with access to Medicaid for individuals with expenses exceeding the allowed limit on the low-expenditure health plan. Three groups of individuals - (1) low-income people, (2) individuals who do not have access to group insurance, and (3) potentially high-expenditure individuals employed by small firms - are eligible for the new private/public health plan combination. The health reform package also includes tax credits to cover part of the costs of the low-expenditure plan, a guarantee-issue requirement on the low-expenditure plan, affordable age-rated and health-status rated premiums, and rules and incentives limiting crowding out of comprehensive health insurance.

Keywords: health insurance, coverage, reinsurance, regulation, Medicaid

JEL Classification: I10, I18, G22