Expanding Health Insurance Coverage

A New Federal/State Approach

Health policy researchers John F. Holahan, Len M. Nichols, and Linda J. Blumberg propose a new insurance coverage model that, like SCHIP, would give states increased federal funding and considerable flexibility to extend coverage to families with incomes below 250 percent of poverty and those with high health risks at any income level. The foundation of this new model is a purchasing pool organized by combining current Medicaid and SCHIP recipients, those newly eligible for subsidies, and others. To receive subsidies, people would have to purchase coverage through the state purchasing pool, but the pool would be open to all. Participants would be assured of paying no more than the statewide community rate.

Any health plan operating through the pool would be required to accept all enrollees. The federal government would establish a minimum set of required benefits and cost-sharing provisions, but states would have flexibility to design their own standard benefit packages. The new higher federal match (30 percent higher than the current Medicaid match) would go to participating states to help fund coverage for everyone below 250 percent of poverty, including previous Medicaid enrollees.