Building a Relationship between Medicaid, the Exchange and the Individual Insurance Market

The alignment of Medicaid and State Health Insurance Exchange (Exchange) policy and practice is a basic tenet of the Patient Protection and Affordable Care Act (ACA). Through both legislative provisions and implementing regulations, the ACA addresses this relationship.1 At the same time, the federal framework provides states with considerable discretion to flesh out the fuller dimensions of system interaction.Even as the federal framework is still evolving, this report examines the practical and conceptual factors that underlie the federal/state relationship. It describes dimensions of collaboration that could help establish a seamless continuum of coverage for those who may move between eligibility for Medicaid or for tax subsidies in the Exchange. Proposed regulations outlining eligibility determination obligations of state Medicaid agencies and Exchanges have been issued. Still to appear are regulations defining essential health benefits, but sub-regulatory policies were issued in a special federal bulletin on December 16, 2011. These will define the scope of essential health benefits to be offered by Qualified Health Plans (QHPs)2, which in turn also will define the coverage obligations of Medicaid “benchmark” coverage for newly eligible persons.