'Woodwork effect' fuels Medicaid growth and cost increases for non-expansion states

05/13/2014 2:53 PM

05/13/2014 4:03 PM

Seventeen states that chose not to expand eligibility for Medicaid under the Affordable Care Act ended up with more program beneficiaries - partly because of all the hoopla surrounding the health law, according to a new analysis by Avalere Health.

More than 550,000 people in these 17 states signed up for Medicaid coverage between October and March, even though they were already eligible for the program but were not previously enrolled.

The wave of signups occurred during the inaugural enrollment period for marketplace health coverage when the Obama administration and supporters were engaged in a massive public outreach and education campaign that resulted in 8 million Americans purchasing a marketplace health plan.

New Medicaid signups were expected in the 26 states that implemented the so-called "Medicaid expansion" that extended program coverage to working-age adults who earn up to 138 percent of the federal poverty level.

But in 17 of the 24 states that didn't expand their Medicaid coverage, program enrollment also increased thanks to the "woodwork effect," created by heightened public awareness of the health law.

The woodwork effect refers to Medicaid-eligible residents who weren't enrolled, but came "out of the woodwork" to do so amid national efforts to get newly-eligible Medicaid residents to sign up.

Georgia led all non-expansion states with nearly 99,000 new Medicaid enrollees, a 5.8 percent increase. North Carolina added 58,000 new enrollees, while South Carolina and Tennessee added nearly 54,000 new Medicaid beneficiaries apiece.

“Though expansion states saw larger total enrollment increases, enrollment of these previously eligible individuals is significant in many non-expanding states,” said Matt Eyles, Avalere's executive vice president.

Under the health law, the federal government pays all medical costs for newly-eligible program beneficiaries in expansion states for the next three years and no less than 90 percent of their costs thereafter.

Non-expansion states, however, "only receive their standard matching rate for these previously eligible beneficiaries,” said Avalere vice president Caroline Pearson.

“As a result, many of these non-expansion states that politically oppose the ACA are now facing unexpected financial and operational pressure due to woodwork enrollment.”

Because Medicaid enrollment continues year-round, woodwork enrollment in non-expansion states will likely continue throughout 2014, putting even more strain on their state Medicaid budgets.

Seven non-expansion states (AL, AK, LA, MO, NE, WI, and WY) saw declines in their Medicaid population, the study found.

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