• The future Medicaid expansion

    As we’ve discussed many times before on this blog, a large proportion of the newly insured under the Affordable Care Act will be getting Medicaid. The law could have chosen to put all the uninsured into the exchanges, with subsidies, to buy private insurance, but that would have been more expensive. That’s because – contrary to what you’ve heard – Medicaid is cheaper than private insurance, and a better deal for the federal government.

    Since Medicaid is paid for by both states and the federal government, this could have been a huge loss for the states. Knowing this, the law basically says, that at least for the first few years, the feds will pick up the tab on 100% of the new people covered by Medicaid under the ACA.

    Still, a lot of states are nervous about this. One reason, which I think is legitimate, is that over time, states will have to pick up the tab for a significant part of the newly insured’s Medicaid. But that’s years away at this point. A more pressing concern, which I think is less legitimate, is that there are a lot of people who qualify for Medicaid right now, but haven’t signed up for it. States fear that the expansion will encourage many of these people to come out of the woodwork and ask for the Medicaid that they should already be getting. I have less sympathy for that.

    But the real question is – how many people new people are going to get Medicaid in the future. There’s a new study in Health Affairs that seeks to answer that question:

    The Affordable Care Act of 2010 will expand Medicaid to millions of Americans by 2014. How many enroll will greatly affect health care access, demand for clinicians, and the federal budget, yet the precision and validity of enrollment estimates made to date is unknown. We created a simulation model using two nationally representative data sets to determine the range of reasonable projections, estimating eligibility, participation, and population growth using prior research and our data.

    What did they find? This:

    The base-case estimate found that 13.4 million new people would sign up for Medicaid. The low estimate was 8.5 million, and the high estimate was 22.4 million. The cost to the federal government for this expansion ranged from $34 billion to $98 billion. Moreover, an additional 4,500–12,100 new doctors will be needed to care for these patients.

    The authors believe that the extent to which efforts encourage or discourage people from enrolling will determine where in this range we will find ourselves. In other words, it will be much like things are now. States that don’t try very hard may see less enrollment than states that do. Ironically, they may be thwarted n their efforts by an unlikely coalition:

    Keep an eye on a new health industry coalition launching today: Enroll America. The 42-member coalition, which includes health heavyweights like the American Hospital Association and Aetna, has been in the works for over a year now. Today, it launches with a single goal: getting millions of Americans, newly-eligible for affordable insurance under the health overhaul law, actually signed up. And if it succeeds, the health law could end up covering many more of the uninsured than the law’s authors — or its detractors — ever thought…

    Families USA director Ron Pollack, a driving force behind Enroll America, recruited one of the oddest-bedfellow coalitions that exists in the health industry right now, which will increase its reach. Some members, like the American Hospital Association, aggressively support the Affordable Care Act. Others aggressively oppose it. The National Association of Health Underwriters, a member group that lobbies for health insurance brokers, has endorsed health reform repeal legislation.

    But if the law stands, they all have a common interest: getting uninsured Americans covered. Insurers want more customers. Hospitals are sick of providing uncompensated care. Health brokers make commissions off enrollment.

    States may be banking on low Medicaid enrollment, as they have in the past. If stakeholders have their way, though, they won’t have a choice.


    • Do they talk about the net insured number that comes with the That 24-25 Million top case? would it put the uninsured rate up to 97+%?

      • I’d have to check, but as long as undocumented immigrants are excluded from Medicaid and the exchanges, it’s unlikely we will ever get that high in insured levels, even if everyone else got insurance.

    • “That’s because – contrary to what you’ve heard – Medicaid is cheaper than private insurance, and a better deal for the federal government.”

      There’s no doubt of that. However I dislike the Medicaid expansion and would have preferred to see Medicaid eliminated entirely. That would have essentially left us with a two-tier system: health insurance through private insurers via an employer or the HIEs and Medicare. The poor would receive care through insurance on the HIEs with a voucher equal to the costs of the basic package. Since the vast majority of the population would all be covered by private insurance, the poor wouldn’t be left in a system vulnerable to cuts that won’t affect most people.

      Unfortunately, Congress couldn’t do that since covering someont through private insurance costs so much more than covering them through Medicaid. Keeping Medicaid kept the deficit down but will, ultimately, leave the poor who are covered by it holding the bag when cuts come.

      • I don’t think you’re wrong. But Republicans weren’t going to vote for the ACA even if that had been included, and Democrats didn’t want the added expense on the bill.

      • @SteveH
        My book basically suggests ending Medicaid overtime by federalizing Medicaid LTC costs of the duals and buying low income into private insurance. This would cost more of course, but would get to two levels and I think the political viability of Medicaid is quite bad long term. Conservatives might hate Medicaid enough to go along. The hardest group is the long term disabled who are not dual eligibles. This is not a panacea, but a part of an attempt at a political deal to allow us to move ahead with health reform.

    • My modeling, based in part on the Lewin Group’s microsimulation model, has it at 18.4M new beneficiaries at a cost of $80B. Their base scenario seems a bit low, but within a reasonable range.

    • 1. The states are right to be scared. Take a look at their revenue-vs-olbigation stats right now. Then look at the magnitude of the pension, benefit, and retirement obligations they’re facing on top of routine operational expenses. Things look pretty dire even before you factor in a significant Medicaid expansion.

      2. The “Medicaid is Cheaper” link puts forth a figure of ~$7K per person via Medicaid. Unless Washington state is a dramatic low-cost outlier, you could get private coverage for a family of four consisting of two 48 year olds, a 10 year old, and a 5 year old for between $5000-12,000 per year *and* give them a check to cover 100% of their annual deductible and come in well below that figure. Like $10,000 less, easy.

      What elephant in the room am I missing (seriously)? Clearly the current population of Medicaid patients is older and sicker and would cost more to cover than my hypothetical family of four, but under the ACA expansion it should become somewhat less so. Is the Medicaid cohort sick enough that it would drive the cost of insuring them up more than two-fold vs this hypothetical?

      3. It’s not clear how the access problem for Medicaid patients will improve under the ACA, given the fact that a significant number of providers are no longer willing to see them. I don’t see that situation improving when there are more of them relative to capacity.

    • 1) The feds are picking up the tab for quite some time. They have every right to be concerned about long-term obligations, but should address them as such honestly.

      2) You’re confusing overall spending with the cost per added person. Most of current Medicaid spending is on dual-eligibles and the disabled. Most of the added eligibles under the ACA are not in those groups and cheaper. Are you really disputing that the ACA was scored more expensive when fewer people were put in Medicaid and more put in the exchanges? http://www.washingtonpost.com/wp-dyn/content/article/2009/10/28/AR2009102804756.html?hpid=topnews

      3) That’s a separate issue. If THAT is the problem you want addressed, then fund Medicaid more robustly so that it can reimburse doctors better. Otherwise, you can’t really complain about the fac that providers don’t like Medicaid reimbursement rates.

    • Thank-you for your reply. My intention isn’t to attack or argue – just clarify.

      1. On 1: Probably not news to you – but a recapitulation of why states are worried.

      2. Doesn’t it make sense to disaggregate spending into two categories and contemplate the lowest cost solutions for each – then? Destitute and horribly ill people that are literally unisurable (mentally ill transients with raging substance abuse problems, completely disabled persons, etc) and people who are in average health but can’t afford health insurance?

      IMO society is going to have to foot the bill for the uninsurable directly, but for those who are poor but insurable – how does Medicaid compare to an income transfer/voucher scheme coupled with private insurance? Most of the plans I linked to were in the range of $400-1000 per month, with deductibles ranging from $1K-10K. That’s $5-12,000 per year per family of four, or $1250-4,000 per year + deductibles. Have there been any serious analyses that have evaluated the costs of income-indexed vouchers + transfers into HSA-like accounts for the insurable poor vs Medicaid? Since that’s the population we’re talking about adding to the rolls.

      Based on figure 2.2 from this link:
      The amount of federal Medicaid spending per non-elderly, non-disabled enrollee = $1660 per person. If per the link above, that constitutes 60% of the tab, then the total per-person is ~$2322 per person for that cohort, or $9288 per a family of four. Based on the CBO’s figures, the cost advantage for Medicaid, at least in Washington state isn’t terribly clear. I suspect the same is true for many other states – particularly those that don’t mandate coverage for infertility, etc.

      3. Wouldn’t increasing reimbursements eliminate most or all of the cost advantage that Medicaid enjoys vs private insurers? I haven’t seen any data that suggest that medicaid does anything other than pay the same providers less for the same care – so the cost advantages are exclusively a function of the low reimbursement rates – no?