More than 75,000 of these new enrollees are expected to be previously uninsured Kansans while an estimated 47,000 are likely to be people who drop or lose their existing coverage.
Coming Out of the ‘Woodwork’
The federal government has promised to pay all costs for three years of covering those whom the ACA makes eligible for Medicaid, the so-called “newly eligible.” In 2017, the federal contribution steps down to 95 percent. It drops to 90 percent in 2020, where it will remain. If the federal government keeps its commitment, the state of Kansas will not need to spend any additional money to cover the newly eligible population until 2017, when state costs specific to that population are expected to total $14 million. To put that in perspective, the current total cost of the Kansas Medicaid program is about $2.9 billion. The state’s share of that is about $1.2 billion.
The eligibility expansion’s biggest impact on state spending will be generated by a phenomenon known to health researchers as the woodwork effect. As the name suggests, this occurs when people who already are eligible for a program but not enrolled suddenly appear and sign up.
Estimating how many eligible but not-enrolled Kansans will come forward for Medicaid in 2014 is important because it will cost the state more to serve them. That is because the federal government will cover only about 57 percent of their costs, leaving the state to pick up the rest. It follows, then, that most of the projected increase in state costs will result from previously eligible Kansans enrolling in Medicaid — something that is likely to occur whether or not the state expands eligibility.
We estimate that of the 29,400 Kansas adults who currently could be eligible for Medicaid but are not enrolled, approximately 11,800 will sign up for the program in 2014. If our estimate is correct, the total additional cost in 2014 will be $27.6 million, of which the state will be responsible for approximately $11.9 million.
Even though the Medicaid eligibility expansion in the ACA does not change the criteria for children, a greater number of them also are expected to enroll. Currently, there are about 45,300 uninsured children in Kansas whose family incomes qualify them for Medicaid or CHIP. Of those, 29,400 are expected to enroll due to the woodwork effect, as shown in Figure 2. In addition, we estimate that 88,500 children would move from private insurance into Medicaid or CHIP.