Medicaid as a Reference Point for Employer Benefit Design

Employer Benefit Design and Medicaid as a Reference

Rethinking the Link Between Higher Premiums and Better Access

For employers selecting health benefits for their workforce, a critical question is whether their chosen plans truly deliver accessible, usable care for employees with varying levels of health need—particularly given rising premiums, deductibles, and co-payments that increasingly shift costs onto employees.
Evidence across multiple U.S. markets suggests that commercial insurers may be underestimating an important reference point: Medicaid coverage.

Analyses from the Milbank Memorial Fund and broader health services literature consistently show that Medicaid programs often deliver broader and more affordable access to care—and in key areas like behavioral health, long-term care, and pediatric care, sometimes broader and more effective coverage—than their commercial counterparts.

This dynamic challenges the assumption that higher premiums and reimbursement rates in commercial insurance automatically translate into better access or value. Medicaid’s design—defined by low cost-sharing, safety-net integration, and coordinated managed care—frequently enables more consistent and usable access to services for high-need populations.

For example, a study published in JAMA found that Medicaid managed care enrollees experience lower measured quality of care than commercial managed care enrollees. However, these differences are largely explained by higher underlying health needs and social risk factors in the Medicaid population, including barriers such as housing instability and transportation challenges that directly affect access to care.

The relatively modest differences in outcomes for a substantially more complex population underscore the importance of Medicaid as a benchmark.

👉 https://jamanetwork.com/journals/jama/fullarticle/209136

Complementing this, analysis from the Milbank Memorial Fund highlights how Medicaid programs are often structured to improve access to behavioral health services through targeted policy requirements, integrated delivery models, and specialized provider networks.
👉 https://www.milbank.org/publications/state-options-for-medicaid-coverage-of-inpatient-behavioral-health-services/

At the same time, high-need populations are not exclusive to Medicaid. They are also present in employer-sponsored commercial plans, but often face significantly higher co-pays, deductibles, and out-of-pocket exposure. These financial barriers can delay or prevent care, particularly in behavioral health and chronic condition management, where continuity and early intervention are critical.

As a result, Medicaid provides a useful reference framework for employers evaluating whether commercial benefit designs are truly supporting access in practice, not just coverage on paper.

Using Medicaid as a reference point helps employers distinguish between plans that are financially efficient on paper and those that are functionally effective in supporting employee health and productivity in practice.