Idaho Medicaid Redesign and People with Disabilities: “Option 3.5”

The Governor’s Work Group on Medicaid Redesign made a new recommendation on November 14th, 2014 to support a “hybrid” version of Medicaid expansion. They called this recommendation “Option 3.5”. It provides Medicaid eligibility for qualifying families below the Federal Poverty Level (FPL), and uses Medicaid funding to purchase coverage on the state insurance exchange for qualifying families between 100% and 138% of the FPL. Implementing this recommendation, or any other option for Medicaid expansion, will be of significant benefit to many Idahoans with disabilities.

Contrary to popular opinion, not all Idahoans with disabilities, who are living in poverty, are eligible for Medicaid. Two large groups are currently excluded. Of the roughly 41,000 Idahoans who have a serious and persistent mental illness (SPMI), only about 9,000 adults are currently eligible for Medicaid. About 10,000 more get treatment each year from the Department of Health and Welfare, but only if their illness becomes so severe that that they pose a serious risk to themselves or others, or if services are ordered by a court. This group (SPMI) includes only those people whose mental illness is disabling and recurring. Providing access to health care coverage for families up to 138% of FPL would include almost all of these people. Medicaid redesign would provide federal funding for the care and treatment they need and relieve the burden on county indigent funds and state general funds for both the Catastrophic Health Care Fund, and the Division of Behavioral Health programs. Currently, most Idahoans with SPMI have no coverage for mental health treatment, or for the very expensive prescription drugs needed to control their symptoms.

People who acquire disabilities after a period of employment, and are unable to work can qualify for Social Security Disability benefits. However, federal law prevents these people from obtaining Medicare coverage for two years after the onset of their disability. If their Social Security benefits exceed $734/month, they are also excluded from Medicaid coverage. At any given time, there are tens of thousands of Idahoans with disabilities in this waiting period. A recent study of Idaho county indigent program claims conducted by Dr. Douglas Dammrose, revealed that 42% of the claimants fell into this category ( 

There are other people with disabilities, including many veterans, who fall into this coverage gap due to individual circumstances. All of them would benefit from access to affordable health care coverage. Option 3.5” could have different effects depending on its implementation. Some plans on the exchange have very little coverage for mental health treatment. Some of the most effective treatments for many people with severe and persistent mental illness are not included in exchange based plans. People with SPMI need a robust benefits package to get adequate coverage and to maximize savings from state general fund programs. This can be provided through Medicaid or through “wrap around” coverage, but it is necessary to address the needs of people with SPMI. Many people in the Medicare waiting period may need long term in-home supports and services to keep them out of expensive nursing home placements. These services are typically covered under Medicaid but not under exchange policies. Idaho must insure that people with particular health care issues caused by disabilities, have access to regular Medicaid coverage or robust “wrap around” supplemental policies, to meet these needs and prevent higher cost services.


Any Medicaid redesign option, which provides access to affordable health care for people in the “coverage gap”, will benefit Idahoans with disabilities and state and county budgets. Option 3.5 will be most effective for people with serious and persistent mental illness and other disabilities if it includes regular Medicaid coverage for those who need services that are not covered by state insurance exchange policies.