Newly eligible for Medicaid spending more than we hoped

There was this study in JAMA that predicted that those newly entering Medicaid as part of the expansion would be healthier than those already enrolled. Austin and I wrote an editorial to accompany that piece. There was another study in the Annals of Family Medicine with a similar conclusion. If this were true, then we’d expect them to spend less in Medicaid than projected. That’s turning out not to be true:

The cost of covering people who qualified for Medicaid as part of the federal health law was significantly higher than expected in 2014, federal actuaries said Friday.

Adults who became eligible for Medicaid as a result of the health law’s expansion of the program to include most low-income Americans incurred average medical costs of $5,517, the Centers for Medicare and Medicaid Services office of the actuary said.

That was about $1,000 higher than had initially been expected for the first full year of the expansion, which marked a sweeping change for the government program that will see its 50th anniversary later this month.

It’s possible that this might be an early blip, and that the newly enrolled really are healthier and will cost less over the long run, but it bears watching. It also bears studying in more detail.


UPDATE – I changed the title. I also want to make this clarification. If you had asked me a couple of years ago, I would have assumed pent-up demands would mean higher spending on entry to Medicaid. Then a few papers came out (I linked to them) that argued that the uninsured-but-eligible were healthier than those who were already enrolled. That meant that when they became insured, they might not be as costly as predicted.

THAT is turning out not to be true. It appears the old thought that newly eligible people are more expensive is correct. Or maybe not. Time will tell.

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