• Newly eligible for Medicaid spending more than we hoped – ctd.

    I have obviously touched a nerve in many TIE readers. So let’s take a step back and revisit what I wrote and what is going on here.

    There were some studies that made predictions about the health and composition of the newly eligible for Medicaid. Those studies could be interpreted to mean the Medicaid expansion would cost less than predicted, because people entering would be healthier than those already enrolled. I WAS ONE OF THE PEOPLE WHO THOUGHT THAT INTERPRETATION MIGHT BE POSSIBLE. A recent report from CMS suggests that this lower-than-expected expense didn’t happen. I wrote that we need to figure out why and keep watching.

    None of this was to suggest that the prior research was incorrect or poorly performed. It appears, upon further looking at the report, that there are some reasons that the differences are higher than estimated:

    There are several explanations for the difference between the estimates in this year’s report and those in previous reports. First, most of the States that implemented the eligibility expansion are covering newly eligible adults in Medicaid managed care programs, and on average the capitation rates for the newly eligible adult enrollees were significantly greater than the projected average costs previously calculated.

    Austin flagged this, by the way. In fact, some of the capitation rates may have been raised because states predicted pent-up demand because they assumed people entering might be sicker (in spite of the research I talked about).

    And there’s this:

    Data for newly eligible adults are still limited. While CMS has reported some enrollment and expenditure data for this group, data on claims and managed care encounters, along with data on the health status and demographics of these enrollees, are not yet available. Thus, there is still considerable uncertainty about the health care costs of newly eligible adults in 2014, as well as for future years.

    Medicaid still expects newly eligible adults to cost less in the future (Figure 6). It’s entirely possible they are correct.

    But here’s the thing. It may be that this research turns out to be incorrect. I doubt it, in that I think the work is correct in that the newly eligible appear to be less sick than those already covered. It may be that this research is correct, and that still spending goes up for other reasons. Maybe people just spend more. Maybe docs find new ways to bill more. Maybe policy makers set capitation rates too high.* But if I report on research, and make some guesses as to the future, and they turn out to be incorrect, I will write that my predictions were wrong, that we need to figure out why, and that we should keep looking into it.

    That’s what I did. That’s what I will continue to do.


    *This appears to be the best hope for an answer right now – but we have to make sure.

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