1. 0
The Role of States in Reshaping the U.S. Health Care System in 2014 and Beyond
Professors Stephen A. Somers and James M. Verdier
Characteristics of the Population That Is Likely to Experience Changes in Medicaid
Eligibility and of the Health Plans That Will Best Serve This Population:
Evidence from Hawaii, New York and Maryland
Isaac S. Lederman
May 5th
, 2014
This paper represents my own work in accordance with University regulations.

2. 1
I. Introduction
Churning, the involuntary movement of individuals between or on and off health
insurance programs, has posed notable challenges for policymakers over the years,
because it creates a number of problems for consumers, health plans, and public
purchasers themselves.1
These problems stem from the disruptions in coverage associated with churning.
Interrupted coverage and hence care have been shown to have adverse effects on the
health of those cycling between or on and off programs.2
In addition, churning gives
insurers little incentive to invest in the long-term health of the individuals they cover, as
it is unclear whether these persons will remain covered by a given plan.3
Lastly, discontinuous coverage increases the difficulty of administration. Churning
leads to greater complexity, thus higher costs, as resources must be devoted to following
individuals’ movement between or on and off programs.4
Beyond that, these transitions
complicate quality measurement due once again to the challenge of tracking individuals.5
1
Medicaid and CHIP Payment and Access Commission, Report to the Congress on
Medicaid and CHIP: March 2014, report (Washington D.C.: Medicaid and CHIP
Payment and Access Commission, 2014), 21.
2
Andrew B. Bindman, Arpita Chattopadhyay, and Glenna M. Auerback, "Interruptions in
Medicaid Coverage and Risk for Hospitalization for Ambulatory Care–Sensitive
Conditions," Annals of Internal Medicine 149, no. 12 (December 16, 2008): 857.
See also Karen M. Freund et al., "The Impact of Health Insurance Reform on Insurance
Instability," Journal of Health Care for the Poor and Underserved 25, no. 1 (February
2014): 96.
3
John A. Graves, Rick Curtis, and Jonathan Gruber, "Balancing Coverage Affordability
and Continuity under a Basic Health Program Option," New England Journal of
Medicine 365, no. 24 (December 15, 2011): e44 (1).
4
Matthew Buettgens, Austin Nichols, and Stan Dorn, Churning Under the ACA and State
Policy Options for Mitigation, report (Washington D.C.: Urban Institute, 2012), 2
5
Ibid.

3. 2
The full implementation of the Patient Protection and Affordable Care Act
(PPACA), beginning in 2014, will, unfortunately, not bring an end to churning.
Nevertheless, the PPACA does seek to mitigate its severity. With regard to state health
programs, especially Medicaid and CHIP, the Act stipulates, “A state shall seek to
coordinate the administration of, and provision of benefits… to maximize the efficiency
of such programs and to improve the continuity of care.”6
In light of this provision, this paper investigates the churning expected to occur in
these programs and Qualified Health Plans (QHPs) starting in 2014. In particular, it seeks
to identify the characteristics of not only the population that is likely to move in and out
of Medicaid but also of the health plans that are predicted to best serve this so-called
churn population.
Understanding the composition of the churn population is key to effectively
addressing this involuntary movement between or on and off programs. In order to craft
successful policy for these individuals, it is necessary to have information on
characteristics about them such as their age and marital status.7
For the most part, information on such characteristics is currently lacking. Studies
to date have tended to focus on the size and location of this population as opposed to its
makeup.8
This paper aims to help fill this gap in knowledge.
6
42, Government Printing Office 8139 § 157-18051 (Government Printing Office 2010).
7
Veronica Guerra and Shannon McMahon, Minimizing Care Gaps for Individuals
Churning between the Marketplace and Medicaid: Key State Considerations, issue brief
(Hamilton, NJ: Center for Health Care Strategies, 2014), 1.
8
Buettgens et al., 2.
See also Benjamin D. Sommers et al., "Medicaid And Marketplace Eligibility Changes
Will Occur Often In All States; Policy Options Can Ease Impact," Health Affairs 33, no.
4 (April 2014): 2.

4. 3
Likewise, understanding which types of health plans best serve the churn
population is also important in reducing the problems associated with transitioning
between or on and off programs. It is imperative to know which plans have the resources
and capacity to handle the costliness and complexity of churning.
As with information on the characteristics of the churn population, few scholars
have examined the capabilities of different health plans with respect to churn. The work
done thus far has concentrated on the quality of care provided, not the ability to cover a
dynamic and ill-defined population.9
This is another gap in knowledge that this paper
intends to help fill.
This paper proceeds as follows. The first section introduces a taxonomy of health
plans. The second section outlines how churning will take place under the PPACA. The
third section attempts to delineate the characteristics of the population likely to churn
under the PPACA. Nevada is the focus of the next section, as its experience with churn
encapsulates the three main findings of this paper. First, market alignment, having
insurers on health insurance exchanges also participate in the Medicaid market or vice
versa, can dramatically reduce the problems associated with churn. Second, health plans
with strong data analytic tools can help states mitigate the problems associated with
churn. Lastly, states must take the lead in alleviating churn, as health plans, for the most
part, will be reluctant to do so.
9
Michael J. McCue and Michael H. Bailit, Assessing the Financial Health of Medicaid
Managed Care Plans and the Quality of Patient Care They Provide, issue brief no. 1511
(New York, NY: The Commonwealth Fund, 2011), 2.
See also Bruce E. Landon and Arnold M. Epstein, "For-Profit And Not-For-Profit
Health Plans Participating In Medicaid," Health Affairs 20, no. 3 (May 2001): 163.

5. 4
These findings are replicated in Hawaii, New York, and Maryland, states whose
experience with churn will be examined in the fifth section of this paper. All of these
states are expanding Medicaid coverage, have above average enrollment of their
Medicaid populations in comprehensive risk-based managed care and are expected to
have slightly more churning than other states.10
Nonetheless, these states vary in the
degree to which their health insurance exchange (HIX) plans participate in the Medicaid
market. Whereas all of Hawaii’s QHP issuers offer Medicaid coverage, only 17% of
Maryland’s QHP issuers do.11
In particular, the case of Hawaii illustrates the power of
market alignment, that of New York the capability of health plans with strong data
analytic tools, and that of Maryland the state-led nature of action to mitigate churn. The
final section offers policy considerations based on these findings.
II. Taxonomy of Health Plans
Three types of health plans will be considered: publicly traded plans with a
commercial background, publicly traded plans with a Medicaid background, and
nonprofit state or local plans. Despite the fact that this taxonomy is somewhat
10
Sommers et al., 4 and Appendix.
See also Henry J. Kaiser Family Foundation, "Status of State Action on the Medicaid
Expansion Decision, 2014," Henry J. Kaiser Family Foundation, 2014,
http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-
under-the-affordable-care-act/.
Also see Medicaid and CHIP Payment and Access Commission, Report to the Congress
on Medicaid and CHIP: June 2013, report (Washington D.C.: Medicaid and CHIP
Payment and Access Commission, 2013), 46-47.
11
Association for Community Affiliated Plans, ACAP List of Qualified Health Plan
(QHP) Issuers By State, December 13, 2013, raw data, Association for Community
Affiliated Plans, Washington, DC.

6. 5
oversimplified, as overlap exists between the first two types of plans, it provides a useful
framework for comparing health plans.12
Though all these types of plans differ in important respects, they all provide fully
capitated, comprehensive risk-based managed care. That is to say, they may limit their
enrollees to a network of providers and are given by states a certain amount of money per
enrollee per month.13
There are significant differences nonetheless. Although both types of publicly
traded plans operate on a for-profit basis, only those with a Medicaid background
specialize in Medicaid, while those with a commercial background specialize in health
insurance for non-Medicaid beneficiaries. Nonprofit state or local plans, however, do not
share in the profits they generate and are subject to greater control by the communities
they serve.14
The penetration of these types of health plans varies by state. In different states
different types of managed care organizations (MCOs) predominate. As Table 1 below
indicates, in the HIXs of the states to be considered in this paper, nonprofit state or local
plans are particularly prevalent. No publicly traded plan with a commercial background is
present on the HIX of either Nevada or Hawaii. And no publicly traded plan with a
Medicaid background is present on the HIX of either Maryland or Hawaii. Nonprofit
12
John Kaelin, Medicaid & The Exchange: Enhancing Quality by Promoting Continuity
of Coverage, Presentation to NCQA, Minneapolis, MN: UnitedHealthcare Community &
State, December 13, 2011, 1.
13
Sharon K. Long, "Do For-Profit Health Plans Restrict Access to Care Under Medicaid
Managed Care?," Medical Care Research and Review 65, no. 5 (April 2008): 1-2.
See also Leslie Clement, Medicaid Managed Care: What This Means for Idaho, PDF,
Boise: Idaho Department of Health and Welfare, 2011, 7.
14
Long, 1-2.

7. 6
state or local plans account for, on average, more than 75% of the insurers on the HIXs of
all four states. Even after excluding Hawaii’s HIX in which all QHP issuers are nonprofit
state or local plans from the calculations, nonprofit state or local plans still account for,
on average, more than two-thirds of the QHP issuers in Maryland, Nevada, and New
York. In sum, nonprofit state or local plans preponderate in the states to be examined.
Table 1: Presence of Different Types of Health Plans on Health Insurance
Exchanges of Nevada, New York, Maryland, and Hawaii
Number of
Medicaid
MCOs
Number of
Publicly
Traded Plans
with Medicaid
Background
Number of
QHP Issuers
Number of
Publicly
Traded Plans
with
Commercial
Background
Number of
Nonprofit State
or Local Plans
Nevada 2 2 4 0 2
New York 9 1 16 4 11
Maryland 1 0 6 1 5
Hawaii 2 0 2 0 2
Note: Data comes from Association for Community Affiliated Plans (2013)
III. Churning in and out of Medicaid under the PPACA
Churning is a function of two factors: complexity and circumstance. The
extraordinary complexity of the American healthcare system means that individuals have
myriad options for coverage or lack thereof. These options do not coordinate to a
sufficient degree with one another, as evidenced by the fact that they operate on different
enrollment timetables.15
Thus eligibility changes due to an alteration in circumstances,
such as an increase in income, force individuals either to find new coverage in this
complex system or to lose coverage altogether. Though the PPACA aims to mitigate the
severity of this problem, it does create new points at which this process of churning is
expected to occur.
15
Danielle Holahan, Coordinating Medicaid and the Exchange in New York, report (New
York: United Hospital Fund, 2011), 8.

8. 7
The way in which churning will take place will depend in part on whether an
individual is in a state that has elected to expand Medicaid coverage. Under the PPACA,
in states that choose to expand their programs, Medicaid provides coverage for people
whose annual incomes are less than or equal to 138% of the federal poverty level (FPL).16
In these states, people with incomes between 138% and 400% FPL are eligible for
subsidies to purchase QHPs on a HIX, if their employer does not offer them what the
PPACA considers affordable coverage.17
Of the states that elect to expand Medicaid coverage, some may choose to create a
Basic Health Program (BHP). Thus far only New York and Minnesota have decided to
implement a BHP.18
According to estimates by the Centers for Medicare and Medicaid
Services (CMS), three states in the next five years will establish a BHP.19
That is to say,
other than New York and Minnesota, only a few states such as Oregon really have serious
interest in putting in place a BHP.
States can use BHPs to provide coverage for individuals with incomes between
138% and 200% FPL who are ineligible for Medicaid, CHIP or any other form of public
coverage.20
As Figure 1 shows, a BHP falls between standard or benchmark Medicaid
16
Sommers et al., 1.
17
Ibid.
18
Sonya Schwartz, "Two States On the Path to the Basic Health Program, “Georgetown
University Center for Children and Families: Say Ahhh! (blog), April 2, 2014,
http://ccf.georgetown.edu/all/two-states-on-the-path-to-the-basic-health-program-2/.
See also Insurance Division, Department of Commerce and Consumer Affairs, State of
Hawaii, Basic Health Program Report: In Accordance with Act 254 (SLH 2012), report
(Honolulu: State of Hawaii, 2013), 1.
19
Amanda Cassidy, Basic Health Program, issue brief, Health Policy Brief (Bethesda:
Health Affairs, 2014), 6.
20
79 FR 14111

9. 8
plans, which provide coverage up to 138% FPL, and QHPs, which in this instance would
provide coverage through HIXs between 200% and 400% FPL. Under the PPACA, most
newly eligible individuals are enrolled in standard or benchmark plans that provide
benefits the Act deems essential.21
Figure 1: Options for Subsidized Coverage under the PPACA
Source: Executive Office of Health and Human Services, Commonwealth of
Massachusetts, Briefing on Basic Health Plan Option, PPT, Boston, MA: Executive
Office of Health and Human Services, Commonwealth of Massachusetts, May 3, 2012.
The rationale for putting in place a BHP is that such a program may help limit
churn. As incomes are most volatile between 138% and 200% FPL, a BHP may ease
transitions in coverage in this range.22
In the absence of a BHP, individual in states
electing to expand Medicaid coverage would, as Figure 1 indicates, could move between
CMS indicates that BHPs can cover individuals with income between 133% and 200%
FPL. Because it uses a slightly different measure of income, Modified Adjusted Gross
Income (MAGI), 133% FPL is equivalent to the 138% FPL mentioned earlier.
21
Jocelyn Guyer and Julia Paradise, Explaining Health Reform: Benefits and Cost-
Sharing for Adult Medicaid Beneficiaries, issue brief no. 8092, Focus on Health Reform
(Menlo Park: Henry J. Kaiser Family Foundation, 2010), 1-2.
22
Schwartz.

10. 9
Medicaid and a HIX. A BHP adds a second point at which churn may occur, as
individuals would cycle between not only Medicaid and QHPs but also the BHP.
In states that elect not to expand Medicaid coverage, a different sort of churning
will happen, as individuals will move between a HIX, being uninsured, and Medicaid. As
of January 2014, in states not expanding Medicaid the median eligibility for the program
is 46% FPL for parents.23
This means a large coverage gap will exist between roughly
46% FPL and 100% FPL, at which point individuals will become eligible for subsidies to
purchase private insurance on a HIX.24
Churning thus will occur on either end of the
coverage gap, as individuals move between Medicaid and uninsured status and between a
HIX and uninsured status.
IV. Characteristics of the Population Expected to Churn in and out of
Medicaid under the PPACA
Knowledge of the characteristics of the population expected to experience the
eligibility changes described above is critical for those designing policies to mitigate
churn. For this reason, this section shows that the population expected to churn in and out
of Medicaid under the PPACA is largely composed of employed, childless adults. These
individuals could be slightly more concentrated in states with higher income levels and
more generous Medicaid programs prior to the arrival of the PPACA.
This section will focus on a subset of the Medicaid expansion population. The
rationale for doing so is that this subset is especially likely to churn in and out of
23
Henry J. Kaiser Family Foundation, The Coverage Gap: Uninsured Poor Adults in
States That Do Not Expand Medicaid, report (Menlo Park: Henry J. Kaiser Family
Foundation, 2013), 2.
24
Ibid., 3.

11. 10
Medicaid under the PPACA. For the purposes of this paper, this subset will constitute the
churn population. As will soon become evident, this subset has income below 138% FPL
and no affordable offers of employer sponsored insurance (ESI). That is to say, Medicaid
is particularly important for this population. Now that this is clear, it is possible to
examine the findings.
If all states expanded Medicaid coverage, nearly a quarter of the total expansion
population could cycle between Medicaid and subsidized Exchange coverage. The total
Medicaid expansion population under a full expansion of the program could be
comprised of as many as 29.4 million individuals under age 65.25
Nichols, and Dorn
estimate that 6.9 million individuals, 23% of the projected total expansion population,
could either move to subsidized Exchange coverage from Medicaid or vice versa.26
These
6.9 million individuals are predicted to have income below 138% FPL and not to receive
offers of affordable health insurance from their employers.27
In addition, this subset of the expansion population is expected to be mostly
childless adults. The term “childless adults” here refers to nonelderly, non-disabled adults
who are neither pregnant nor have dependent children.28
Childless adults are predicted to
constitute the largest component of the expansion population, as they were ineligible for
Medicaid in most states before the passage of the PPACA.29
And just as childless adults
25
Matthew Buettgens, Austin Nichols, and Stan Dorn, Churning Under the ACA and
State Policy Options for Mitigation, report (Washington D.C.: Urban Institute, 2012), 1.
26
Ibid.
27
Ibid.
28
Sharon K. Long and Heather Dahlen, "Expanding Coverage to Low-income Childless
Adults in Massachusetts: Implications for National Health Reform," Health Services
Research, forthcoming, 4-5.
29
Ibid., 16.

12. 11
are likely to predominate in the expansion population, they are likely to predominate in
this subset of the expansion population.
Beyond that, there will be high levels of employment in this subset of the expansion
population. While slightly more than half of the expansion population was employed in
2011, the expansion population’s effective employment rate, that is the ratio of employed
to participants in the labor force, at that time was 72.3%.30
As before, it seems plausible
to assume that what is true for the expansion population also holds for this subset of it.
Lastly, this subset of the expansion population could be slightly more prevalent in
states with higher income levels and more generous Medicaid programs prior to the
arrival of the PPACA. Sommers, Graves, Swartz, and Rosenbaum found that although
churning could take place in every state, individuals in states with lower poverty rates
and higher per capita and median household income could experience somewhat more
eligibility changes.31
Individuals in states with higher Medicaid eligibility for nonelderly
adults before the ACA could also move more between or on and off the program.32
Thus
relatively wealthy and generous states such as New York could see a great deal of
eligibility changes, especially between Medicaid and subsidized Exchange coverage.33
This subset of the expansion population, in other words, could preponderate in these
states.
30
Joshua Fangmeier and Marianne Udow-Phillips, The ACA’s Coverage Expansion in
Michigan: Demographic Characteristics and Coverage Projections, issue brief, Cover
Michigan 2013 (Ann Arbor, MI: Center for Healthcare Research & Transformation,
2013), 5.
31
Sommers et al., 4.
32
Ibid., Appendix.
33
Ibid., 4.

13. 12
These findings imply that states should consider simplifying care for these
employed, childless adults who are likely to churn in and out of Medicaid under the
PPACA. As was noted in Section III, the options for coverage do not coordinate to a
sufficient degree with one another. Experiencing one eligibility change, let alone many, is
extremely difficult, when enrollment timetables differ. In the following sections states
will be assessed on the degree to which they are expected to make coverage less complex.
V. Nevada’s Representative Experience with Churn
Nevada has pursued policies that could simplify coverage. It has increased the
alignment of its Medicaid and Exchange markets, a move that could diminish potential
problems associated with churn. In addition, the state has contracted with a health plans
with strong data analytic tools. These data tools could help the health plan diminish the
various problems connected to churn. These initiatives, however, matter on account of
more than just their potential effectiveness. They underscore the state-led nature of action
to mitigate churn.
Efforts to alleviate the problems associated with churn mostly arose from the public
sector, not the private sector. In particular, Medicaid officials in Nevada were responsible
for the policies that could make coverage less complex. As these officials were
developing a Request for Proposal (RFP) for MCOs to provide care to Nevada’s
Medicaid population, they talked with their counterparts at Nevada’s HIX about creating
a plan to serve Medicaid beneficiaries who become ineligible for the coverage they

14. 13
receive through a Medicaid MCO.34
The innovative approach that grew out of these
conversations was integrated into the RFP that Nevada released in September 2012.35
Market alignment features prominently in this approach. Medicaid MCOs are
required to have at least one Gold and one Silver QHP on either the state or federal
HIX.36
In addition, these QHPs must utilize the same provider networks as Medicaid,
serve the geographic areas in which the MCO operates, cover the same benefits as the
MCO, and charge premiums that do not exceed by 15% the median premium on the
HIX.37
This market alignment is predicted to not only reduce the problems associated with
churn but also do so cheaply. As one analyst has noted, "This is one of the best, cost-
efficient ways for states to deal with this issue of churn."38
Market alignment can be
effective, as individuals, in the face of changing circumstances, can remain with their
health plans. And market alignment is inexpensive, because states only need to require
plans’ participation in both the Medicaid and Exchange markets.
There is more to this approach, however, than just market alignment. The state has
contracted with a Medicaid MCO with strong data analytic tools. Amerigroup Nevada, a
subsidiary of WellPoint, has powerful data tools. Amerigroup Nevada is the first
34
Silver State Health Insurance Exchange, Medicaid Managed Care Organization
(MCO) Transition Plans, report (Carson City: State of Nevada, 2011), 1.
35
State of Nevada, Purchasing Division, Request for Proposal: 1988 for Medicaid
Managed Care Organization Services, 1988, State of Nevada, Department of
Administration, Purchasing Division (Carson City: State of Nevada, 2012), 1.
36
Ibid., 10.
37
Ibid., 11.
38
Dylan Scott, "States Work to Smooth Transition from Medicaid to Health
Exchanges," Governing Magazine, February 25, 2013,
http://www.governing.com/blogs/view/gov-states-work-to-smooth-transition-from-
medicaid-to-health-exchanges.html.

15. 14
Medicaid MCO to use iChip, a personal health record technology that could simplify
coverage for its clients.39
By allowing Medicaid beneficiaries to have constant access to
their eligibility information, iChip could reduce the confusion that can result from the
complexity of the American healthcare system. Beyond that, it is expected to increase
administrative efficiencies by uniting eligibility, claims, and clinical data.40
Though Nevada did not mandate the use of iChip, it is clear that the state in many
ways has taken the lead in mitigating churn. The fact that Nevada had to require the
participation of Medicaid MCOs on either the state or federal HIX reflects health plans’
general reluctance to alleviate churn.
In sum, Nevada’s experience indicates the state-led nature of action to mitigate
churn, the capability of plans with strong data analytic tools, and the power of market
alignment. As these findings are replicated in Hawaii, New York, and Maryland in the
following section, Nevada’s experience with churn is representative.
VI. Characteristics of Health Plans that Will Best Serve the Churn
Population: Evidence from New York, Maryland, and Hawaii
Nevada’s experience with churn encapsulates the three main findings of this paper.
Analysts predict market alignment in Hawaii will reduce the potential problems
associated with churn to as great or an even greater extent than in Nevada. Market
alignment is, in other words, a powerful tool to lessen the problems associated with
churn. And in the same way Amerigroup Nevada’s data tools could simplify coverage,
39
Anthony Brino, "Amerigroup First Medicaid Plan to Use Chip-based Member
Record," Healthcare Payer News, March 11, 2014.
40
Ibid.

16. 15
the strong data analytic tools of some health plans in New York State could also diminish
the complexity of coverage. That is to say, plans with data tools can help states alleviate
the problems associated with churn. Lastly, just as Medicaid officials in Nevada took the
lead in mitigating the problems associated with churn, so to did their counterparts in
Maryland. In short, states must be proactive, as health plans will generally be unwilling
or even oppose action on churn. These results are summarized in Table 2 below. Each of
the following subsections will address the findings for each state.
Table 2: Summary of Findings from Hawaii, New York, and Maryland about
Health Plans and the Churn Population
What They Did Results Main Takeaways
Hawaii • Complete
overlap
between
Medicaid and
Exchange
• Reduced
problems
associated
with churn
• Power of
market
alignment
New York • 56% overlap
• Regulations
• BHP
• Reduced
problems
associated
with churn
• Easier
transitions
• Less churn
• Capability of
plans with
data tools
Maryland • 17% overlap
• Regulations
• Reduced
problems
associated
with churn
• Greater
continuity of
care
• State-led
nature of
action
Note: Data comes from Association for Community Affiliated Plans (2013), New York State
Department of Health (2013), New York State Department of Health Office of Health Insurance
Programs (2011), and National Alliance on Mental Illness: Maryland (2013).
Hawaii
Hawaii designed an exchange in which both insurers providing QHPs also operate
Medicaid MCOs. This market alignment is expected to mitigate potential problems
associated with churn significantly. Though these plans do not cover all Medicaid

17. 16
beneficiaries in the state, the complete overlap between Medicaid and Hawaii’s HIX is
expected to ease transitions between these two sources of coverage.
Hawaii created a HIX that is expected to dramatically reduce the problems
associated with churn. Both insurers who provide QHPs on the state’s HIX also operate
Medicaid MCOs.41
This means transitions off the HIX into Medicaid could be relatively
easy for individuals.42
Nevertheless, individuals may face difficulties moving from
Medicaid into the HIX, as only two of the six MCOs that offer coverage to Hawaii’s
Medicaid beneficiaries provide QHPs on the exchange.43
This market alignment represents a potentially significant achievement in terms of
simplifying coverage. Movements from the HIX into Medicaid are expected to be
simplified. Though transitions in the opposite direction are forecast to be not quite as
smooth, Hawaii’s market alignment could have a major impact on the problems
associated with churn.
Lastly, Hawaii’s experience indicates that health plans participating in both the
Medicaid and Exchange markets are expected to perform better than their counterparts
operating in only one of those markets. That is to say, the plan’s background or profit-
orientation is not expected to be as consequential as its participation in both the Medicaid
and Exchange markets.
41
Association for Community Affiliated Plans, Overlap Between Medicaid Health Plans
and QHPs in the Marketplaces: An Examination, report (Washington D.C.: Association
for Community Affiliated Plans, 2013), 3.
42
Ibid.
43
Consumer Reports, "Health-Insurance Plan Rankings from the NCQA," Consumer
Reports, 2012, http://www.consumerreports.org/health/insurance/NCQA-
rankings.htm?state=HI&planCategory=medicaid.

18. 17
New York
As Table 2 indicates, New York State has aligned its markets to some degree, put
in place regulations to increase the continuity of coverage and care, and enacted a BHP.
What makes the state noteworthy, however, for the purposes of this paper, is the fact that
plans with strong data analytic tools operate in its health insurance market. More
specifically, United Healthcare of New York and the North Shore-Long Island Jewish
Health Care System (LIJ) are expected to handle the costliness and complexity of churn
well due to their powerful data analytic tools.
United Healthcare of New York is particularly distinctive. It is a subsidiary of
UnitedHealth Group, the nation’s largest and perhaps most data-savvy publicly traded
commercial insurer.44
As one analyst observed in 2013, UnitedHealth is “far ahead” of
other companies in terms of its data-related investments.45
These investments could
redound to the public’s benefit. UnitedHealth and, by extension, United Healthcare’s
ability to track eligibility and watch claims could mean simpler coverage and greater
continuity of care for individuals.46
In addition, the North Shore-LIJ will have data tools at its disposal that could
reduce the problems associated with churn. According to the Chief Information Officer of
the nonprofit, the organization will invest $25 million in interoperability with “a focus
44
Anonymous, "New York: Health Insurance," U.S. News & World Report, April 7,
2014, http://health.usnews.com/health-insurance/new-york.
45
Joseph Conn, "Data Battle: UnitedHealth Deal Is Latest Move in Industry
Shift," Modern Healthcare 43, no. 5 (February 4, 2013): 12.
46
United Healthcare Corporation, Form 10-K, report (Washington D.C.: U.S. Securities
and Exchange Commission, 2014), 7.
See also "Draft - JMV Comments - Interviews with State and Health Plan People," e-
mail message to author, April 21, 2014.

19. 18
around integrated delivery and continuity of care.”47
When the project is complete,
providers will be able to share data with each other and have access to comprehensive
records for each patient.48
This is expected to increase the continuity of care, as providers
could use this information to continue courses of treatment for patients whose eligibility
is changing and who are moving to different providers.
In sum, plans with strong data analytic tools could handle churn better than their
counterparts without these tools. As before, the plan’s background or profit-orientation is
not expected to be as consequential as its possession of the tools themselves.
Maryland
Of all the states examined in this paper, Maryland has the least overlap between
Medicaid and its HIX. This minimal market alignment is expected to translate into little
simplification of coverage. Increasing market alignment, unfortunately, has been
unfeasible, as not only do small Medicaid plans lack the capital to become QHPs but also
Maryland’s Medicaid payment rates are too low to attract one of the state’s largest
commercial plans to enter the market.49
Given that this is the case, regulations to increase
the continuity of care have been the only viable option. The conflict over these
regulations reveals the state-led nature of action to mitigate churn, as health plans were
opposed to provisions that would increase the continuity of care.
47
Lindsey Dunn, "When a "Health System" Is Defined by Data, Not by Buildings: North
Shore-LIJ's Interoperability Investment," Becker's Hospital CIO, April 30, 2014,
http://www.beckershospitalreview.com/healthcare-information-technology/when-a-
health-system-is-defined-by-data-not-by-buildings-north-shore-lij-s-interoperability-
investment.html.
48
Ibid.
49
"Draft - JMV Comments - Interviews with State and Health Plan People."

20. 19
Health plans’ resistance lay in the fact that these regulations would increase costs
for them. These regulations in the Health Progress Act of 2013 stipulated that MCOs
must allow their new clients to receive preauthorized treatment, medication, services and
procedures for the lesser of 90 days or the duration of the treatment.50
Likewise, for some
conditions new clients could continue to receive treatment for up to 90 days.51
And in the
case of pregnancy, new clients could see existing providers for all trimesters and the first
postpartum visit.52
These regulations were forecast to have a small impact on cost. They were
estimated to increase costs $0.07 per member per month for commercial carriers and
$0.05 per member per month for Medicaid MCOs.53
That is to say, out of a $300
baseline, costs would rise $0.07 for commercial carriers to cover individuals transitioning
into private coverage from Medicaid and $0.05 for Medicaid MCOs to cover individuals
transitioning in the opposite direction.54
Though these costs may seem small, they were large enough to motivate
significant opposition to the Health Progress Act of 2013 from health plans. One
informant noted that “it was a hard fought battle” for these provisions to remain in the
50
Maryland State Legislature, Maryland Health Progress Act of 2013, March 20, 2013,
House Bill 228.
51
Ibid.
52
Ibid.
53
Charles J. Milligan, Medicaid Managed Care in an Era of Health Reform, PPT,
Annapolis: Maryland Department of Health and Mental Hygiene: Office of Health Care
Financing, June 25, 2013.
54
Dylan Scott, "Maryland's One-of-a-Kind Plan to Simplify Switching Health
Insurance," Governing Magazine, March 13, 2013,
http://www.governing.com/blogs/view/gov-marylands-one-of-a-kind-plan-to-simplify-
switching-health-insurance.html.

21. 20
legislation, since “health plans were not too fond of having to pay for this.”55
The fact
that these provisions remained in the legislation that was eventually passed is a testament
to the state-led nature of action to mitigate churn, as state Medicaid officials were
decisive in their preservation.56
Maryland’s experience thus gives reason to believe that few, if any, health plans
will be eager to alleviate churn. Given that increasing the continuity of care may mean
higher costs for health plans, states should consider taking the lead in reducing the
problems associated with churn.
VII. Conclusion
This paper has examined the characteristics of not only the population likely to
churn in and out of Medicaid under the PPACA but also the health plans that are
expected to best serve this dynamic group of individuals. It has found that the population
likely to churn in and out of Medicaid is largely composed of employed, childless adults
and is more prevalent in states with higher income levels and more generous Medicaid
programs before the PPACA. Though few health plans will be eager to alleviate churn,
the health plans that are expected to best serve this dynamic population are those that
operate in both the Medicaid and Exchange markets and have strong data analytic tools.
These findings do lead to considerations for policymakers. First, states should take
the lead in alleviating churn due to health plans’ reluctance to do so. Second, states
should increase market alignment, as it is an effective and cost-efficient way of reducing
the problems associated with churn. Lastly, states should contract with health plans with
55
"Draft - JMV Comments - Interviews with State and Health Plan People."
56
Ibid.

22. 21
strong data analytic tools, since these health plans are expected to have the capability to
handle churn.
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