Considering Medicaid Expansion for Your State? Read This Study.

States that expanded early started with low numbers and a disproportionately sick population, but a new study says it got better with time.

SAN FRANCISCO, CA - SEPTEMBER 21: Protestors carry signs as they demonstrate against proposed cuts to Medical and Medicare outside San Francisco city hall on September 21, 2011 in San Francisco, California. Dozens of disabled people staged a protest against proposed cuts to Medical, Medicare and Medicaid programs.
National Journal
Clara Ritger
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Clara Ritger
Jan. 6, 2014, 11:05 a.m.

States that un­der­went early ex­pan­sions of their Medi­caid pro­grams re­duced their un­in­sured pop­u­la­tion, but they also pulled some cus­tom­ers off of private plans and onto gov­ern­ment in­sur­ance rolls, ac­cord­ing to a new study.

In an ef­fort to un­der­stand how states fared after ad­opt­ing Obama­care’s Medi­caid ex­pan­sion, a team of re­search­ers from Har­vard Uni­versity and the Urb­an In­sti­tute eval­u­ated of­fi­cial monthly Medi­caid en­roll­ment data from Con­necti­c­ut, the Dis­trict of Columbia, Cali­for­nia, and Min­nesota — the first four areas to grant pro­gram eli­gib­il­ity to some child­less adults.

The re­search­ers then com­pared the change in un­in­sured rates in those four states with states that did not change their Medi­caid eli­gib­il­ity re­quire­ments in or­der to gauge wheth­er ex­pand­ing Medi­caid in­creased cov­er­age for vul­ner­able pop­u­la­tions. The find­ings — pub­lished in the Janu­ary is­sue of Health Af­fairs — showed a steady in­crease in en­roll­ment over time, and a dis­pro­por­tion­ately sick num­ber of en­rollees in the early months.

The Af­ford­able Care Act ini­tially com­pelled states to make all in­di­vidu­als with in­comes up to 138 per­cent of the fed­er­al poverty line eli­gible for Medi­caid, set­ting a na­tion­al stand­ard to re­place a sys­tem that al­lowed states to set their own re­quire­ments. The Su­preme Court struck down that pro­vi­sion of the law in Ju­ly 2012, leav­ing each state the op­tion of wheth­er to ad­opt the new stand­ard.

As state gov­ern­ments’ choices for Obama­care im­ple­ment­a­tion con­tin­ue to take ef­fect, however, early pro­gram ex­pan­sions can serve as a road map for what lies ahead. In 2010, Con­necti­c­ut ex­pan­ded by between 56 and 68 per­cent (de­pend­ing on re­gion­al vari­ations) and D.C. al­lowed in­di­vidu­als earn­ing as high 200 per­cent of poverty in­to Medi­caid. Cali­for­nia fol­lowed Con­necti­c­ut’s ex­ample in 2011, and Min­nesota ex­pan­ded up to 75 per­cent of poverty that same year.

For states still weigh­ing wheth­er to ex­pand, the re­search could con­firm fears of an ex­pens­ive bur­den on state budgets. But it also could sig­nal gains from ex­pand­ing early, says re­search­er Ben­jamin Som­mers, a pro­fess­or at the Har­vard Uni­versity School of Pub­lic Health.

“We do find some evid­ence that the first en­rollees are go­ing to be sick­er but that should level out over time,” Som­mers said. “In some ways that makes the case that states should do the ex­pan­sion early, when they are get­ting 100 per­cent of the pro­gram paid for by the fed­er­al gov­ern­ment.”

The fed­er­al gov­ern­ment is re­quired to pay the full cost of Medi­caid ex­pan­sion for states from 2014 to 2016, with pay­ments re­du­cing to no less than 90 per­cent there­after. In some cases, those fed­er­al dol­lars are re­pla­cing private money.

In Con­necti­c­ut, the re­search­ers found, roughly 40 per­cent of new Medi­caid re­cip­i­ents had pre­vi­ously been on private cov­er­age. The phe­nomen­on is known as “crowd-out,” and could res­ult in un­ne­ces­sary pub­lic spend­ing if the same trend oc­curs at the fed­er­al level.

But the states also saw a “spillover ef­fect,” a term used to de­scribe a spike in sign-ups by in­di­vidu­als who were eli­gible pri­or to the ex­pan­sion.

“There’s good evid­ence already that that is hap­pen­ing in states that did not ex­pand and are see­ing in­creased en­roll­ment in their Medi­caid pro­grams,” Som­mers said.

Des­pite some trans­fer of in­di­vidu­als from private in­sur­ance or ex­ist­ing state pro­grams, Medi­caid ex­pan­sion over­all ex­pan­ded cov­er­age for the pre­vi­ously un­in­sured. Con­necti­c­ut, for ex­ample, saw a stat­ist­ic­ally sig­ni­fic­ant 4.9 per­cent in­crease in Medi­caid cov­er­age among child­less adults with in­comes be­low 56 per­cent of poverty, ac­com­pan­ied by a 2.8 per­cent de­crease in the un­in­sured, ac­cord­ing to the study.

Som­mers said he ex­pects to see what happened in the three states and the Dis­trict re­flec­ted in what hap­pens na­tion­wide as full-scale im­ple­ment­a­tion un­folds.

“These ex­pan­sions in cov­er­age take time,” Som­mers said. “En­roll­ment con­tin­ued to in­crease two to three years in­to the ex­pan­sion. Those who were quick­est were those who had health prob­lems that they couldn’t get care for be­fore. I would ima­gine we would prob­ably see that on a na­tion­al scale.”

It’s also why he says it’s “way too early” to be draw­ing con­clu­sions from the en­roll­ment data of the first three months since the ex­changes went live.

Slug­gish en­roll­ment was a trend in the four states and is mag­ni­fied at the na­tion­al level by the glitches that plagued the fed­er­al web­site in its first two months after launch. The Health and Hu­man Ser­vices De­part­ment has also said it was delayed in its trans­fer of Health­ ap­plic­a­tions deemed eli­gible for Medi­caid to the states.

In ad­di­tion, the re­search­ers note that not all states are ex­per­i­en­cing polit­ic­al cli­mates that are sup­port­ive of the changes to the pro­gram, and each state’s un­in­sured pop­u­la­tion is dif­fer­ent.

But the na­tion­al ex­pan­sion is but­tressed by much great­er pub­li­city and out­reach, con­sist­ent me­dia at­ten­tion, and the pres­sure of the in­di­vidu­al man­date that re­quires con­sumers to get covered or face a pen­alty, which could mean an easi­er, faster en­roll­ment pro­cess over the first year.

To date, 3.9 mil­lion people have been deemed eli­gible for Medi­caid, ac­cord­ing to HHS, and 2.1 mil­lion signed up for in­sur­ance in the in­di­vidu­al mar­ket roughly halfway in­to the 2014 open-en­roll­ment peri­od. Up­dated en­roll­ment totals are ex­pec­ted to be re­leased mid-Janu­ary.

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