Medicaid is a cost-saving measure. But we think it deserves credit as something more: a risk management tool.
We’ve been talking recently about Medicaid as a way for companies to support workers and save on COBRA costs following a WARN notice. Strategically speaking, however, the best time to discuss Medicaid isn’t during layoffs.
The reality is, Medicaid can do the most good for your company when it’s used to proactively manage risk. Here’s why — and where to find risk-reducing opportunities.
How Medicaid Mitigates Risk
Risks come in many forms. All have the potential to hurt your bottom line, but they vary in how severe, likely, and addressable they are.
While the likelihood and severity of the following scenarios may be arguable, the value of Medicaid should they come to pass is not. Let’s look at them by category:
Supplier risks are those that limit your access to the goods and services you need. Medicaid can provide protection against:
- Rising benefits costs
Employers expect their health insurance costs to rise about 5% this year. Chances are good that you pay for part of your employees’ health insurance premiums, whereas employers pay nothing for those employees that waive the plan because they are on Medicaid. And remember, employees on Medicaid at the time of termination are not eligible for COBRA, which has hidden costs for employers.
- Point-of-care disruptions
Workers, especially those with chronic conditions, need care. But the industry’s complex delivery model is sensitive to shortages and delays.
Because insurers maintain networks, members’ options may be limited if a provider near them can’t fit them in or fill a prescription. In a recent Insure.com survey, 47% of Medicaid enrollees gave their network five stars, compared to 40% for employer plans.
- Supplier bankruptcies
Medicaid is funded by the federal government and administered by the states, whereas commercial health insurers are private companies. While not common, at least a dozen health insurance companies have declared insolvency in the last decade.
Labor risks are those that reduce or strain your human resources. Medicaid can reduce:
Research shows employees are more likely to stay in their position if they like their health plan. Medicaid reduces turnover because it removes the incentive for employees to seek another role for health insurance.
- Absenteeism and presenteeism
Workers with health insurance don’t miss as many work days. They can be both physically and mentally present, rather than struggling with an untreated condition or worrying about affording care. And because Medicaid also provides family coverage, including long-term care, they don’t need to worry about an ill spouse or child being uninsured.
Because workers who can access healthcare are generally healthier, they may be less likely to get injured or make mistakes on the job. Injuries and mistakes risk not just the worker’s productivity but the company’s property and legal liability.
Political risks are those that expose your company to undesirable developments in public affairs. With Medicaid, you don’t need to worry about:
- Changes to the health insurance landscape
The Supreme Court has already upheld both the Affordable Care Act generally and Medicaid expansion specifically. Any future challenge to Medicaid would need to find a new perspective that squares with those precedents.
True, the Trump administration approved waivers allowing states to charge premiums and impose work requirements on enrollees. But the Biden administration has since rolled them back, and there is no immediate path to rebut those changes.
These days, the states — both red and blue — tend to create many of employers’ headaches when it comes to private insurance. If California Senate Bill 1189 were to become law, employers would be required to develop and make public a policy for protecting employees’ biometric information. If Roe v. Wade is struck down, some states may limit private coverage for abortion.
- Political posturing
Every so often, a company becomes an unlucky target of one party’s or politician’s disaffection. Not even Disney is not immune.
There’s no need to announce you’re helping eligible workers access health insurance via Medicaid, but the consequences may be politically beneficial. For example, employees on Medicaid push down your uninsured rate — a meaningful statistic to those focused on labor rights.
The universe of risk is wide and deep. Medicaid can make a surprising dent on the everyday ones, like absenteeism, and the longer-term ones, like a changing health insurance landscape.