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Issue Brief: Interpreting Early Medicaid Expansion Results

How have states been impacted so far?

By Andrea N. Hinton, Linda J. Sheppard, J.D. | September 07, 2016

Issue Brief: Interpreting Early Medicaid Expansion Results

Six years have passed since the Affordable Care Act (ACA) was implemented, and 32 states, including the District of Columbia, have expanded or are in the process of expanding their Medicaid programs. Nineteen states—including Kansas—are still debating the issue. The Kansas Health Institute (KHI) has released an issue brief entitled Interpreting Early Medicaid Expansion Results that explains what is known so far in states that did expand.

Enrollment higher than expected. Early data show that expansion states are experiencing higher-than-expected enrollment of newly eligible individuals, and overall Medicaid enrollment growth is about three times higher in states that expanded Medicaid than in those that did not. Overall enrollment growth is due to factors beyond the numbers of newly eligible. Enrollment may increase in both expansion and non-expansion states as the result of the woodwork effect, where previously eligible people enroll because of increased awareness of the Medicaid program. Enrollment may also increase because of crowd out, when individuals drop private health insurance because they become eligible for Medicaid, which may be less expensive and offer better benefits.

State costs changing. While the federal government has paid 100 percent of the cost of newly eligible individuals through 2016, beginning in 2017, states will be responsible for paying 5 percent of the costs for these enrollees. Many states have experienced per member/per month costs that were close to expectations, but others have seen higher-than-expected costs per member. Furthermore, higher-than-expected enrollment can have a significant impact on the states’ share of costs. For that reason, careful monitoring of enrollee characteristics, per-member costs and enrollment numbers all are critical for projecting state budget implications.

Source: Kansas Health Institute, 2016.

Expansion alternatives. Most states have expanded Medicaid under a “traditional” model as called for under the ACA. However, some states—most of which have Republican leadership—have taken an alternative approach, which requires approval by the Centers for and Medicare and Medicaid Services (CMS).

CMS has approved some, but not all, of the alternative expansion principles proposed by states. The use of work referral programs, enrollee cost-sharing and health savings accounts have consistently been approved. Block grants, work requirements or lock-out periods for enrollees who fail to meet certain cost-sharing requirements have not been allowed.

Don’t miss KHI’s State Spotlights to learn more about individual state experiences under Medicaid expansion. 

The Kansas Health Institute delivers credible information and research enabling policy leaders to make informed health policy decisions that enhance their effectiveness as champions for a healthier Kansas. The Kansas Health Institute is a nonprofit, nonpartisan health policy and research organization based in Topeka, established in 1995 with a multiyear grant from the Kansas Health Foundation.