In the largest one-year enrollment bump in program history, 8 million Americans are expected to gain health insurance in 2014 through Medicaid under the nation’s massive health care overhaul.
The Medicaid expansion is a signature provision of the Patient Protection and Affordable Care Act and will mark a symbolic turning point in the controversial public and private effort to provide health insurance for all Americans.
Yet questions about the cost of the expansion, whether states will cooperate and a potential shortage of care providers has cast a cloud of uncertainty over the move as the nation’s rapidly evolving health care system readies for this rare jolt of newly insured patients – and whatever surprises come with them.
“The challenge is you don’t know who will show up until they show up,” said Matt Salo, executive director of the National Association of Medicaid Directors.
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He said that nearly every state that has undergone a large expansion of its Medicaid eligibility has seen two things: “More people show up than you think will show up, and the people that show up are sicker than you expected.”
Along with requiring individuals to purchase health insurance or face a fine, the law, which critics have derisively referred to as “Obamacare,” allows states to expand Medicaid coverage to non-elderly adults who earn up to 138 percent of the federal poverty level. That’s about $15,900 for an individual in 2013, or nearly $32,500 for a family of four.
It’s unclear how many states ultimately will embrace the Medicaid expansion, since there’s no time limit for them to decide.
So far, 21 states and the District of Columbia are set to make the move next year, according to the Advisory Board Co., a health care consulting firm. Another four states are leaning toward expansion, while 12 others won’t participate, and five more are leaning toward not participating. Eight states are still undecided.
Most of the 8 million new Medicaid enrollees will be low-income childless adults, a group that Medicaid has traditionally shunned. The rest will be low-income parents whose earnings exceed current Medicaid eligibility thresholds, and poor people with disabilities who don’t meet the disability requirements for the Supplemental Security Income program, a federal cash assistance program run by the Social Security Administration.
As a group, the new Medicaid enrollees will be fairly young, with an estimated median age of just 31, according to PriceWaterhouseCoopers’ Health Research Institute. They’ll also be poor. The institute estimates that only 26 percent will have a full-time job and that their median annual income will be roughly 65 percent of the federal poverty level.
That’s less than $7,500 a year for an individual in 2013, or roughly $12,700 for a family of three.
In addition, most of the new Medicaid enrollees will be female – about 54 percent – and the vast majority – about 74 percent – will be white, according to the group’s estimates. Blacks will make up about 18 percent, according to the institute, while the other 8 percent will be Asian, Native American or biracial.
Hispanics, who can be black or white, likely will make up 28 percent of the new Medicaid population, according to estimates by Avalere Health, a Washington research and consulting firm. That syncs with a Health Research Institute estimate that more than one-third will not speak English as their primary language, which can be a formidable obstacle to quality care.
“We anticipate that this will be a significant challenge, both for insurers and for providers,” said Ceci Connolly, PwC's Health Research Institute's managing director. “Some large integrated health systems are already looking at specific geographic markets where this could be a problem and are working on translating material, bilingual call center staffers, bilingual signage, and multi-lingual providers.”
Avalere also estimates that nearly 12 percent, or about 960,000, of the new Medicaid enrollees will have a serious mental illness that requires treatment.
“You’ve got a disproportionately high prevalence of serious mental illness, schizophrenia, major depressive disorders, manic depression, which of course contributes to their not being able to maintain a job and have a higher income,” said Caroline Pearson, health reform director at Avalere.
But because they are younger than the current Medicaid population, the new enrollees also will be less likely to have the sorts of nagging, chronic illnesses that older Medicaid enrollees face. In fact, nearly four out of five new enrollees self-report their health condition to be either good, very good or excellent, according Avalere.
That bodes well for holding down the cost of their care. But until they are actually in the health care system, speculation about their medical needs is still a guessing game.
Assuming that newly insured people will take advantage of their coverage and discover undetected illnesses is a safe bet in the long run, but other experts say an initial spike in treatments might not occur as soon as expected.
“The picture is a bit more complicated because there’s other research that says when people gain coverage, it takes them a while to figure out how to use those new services,” said Matthew Buettgens, a senior research associate at the Urban Institute’s Health Policy Center. “So what happens in the initial months when they gain coverage is a bit uncertain.”
Most experts agree that having insurance and a primary caregiver increases the likelihood that the new enrollees’ health problems will be treated in a timely manner, which holds down the cost of care.
States originally were required to expand their Medicaid rolls under the Affordable Care Act or face the loss of federal funding. But that mandate was ruled unconstitutional by the U.S. Supreme Court in June 2012. In the aftermath of the decision, however, many Republican governors – including some who vowed to block the Medicaid expansion – have since come to support it.
Their about-face stems largely from the fact that the federal government will cover the cost of the newly eligible Medicaid recipients in 2014, 2015 and 2016. After that, the states’ share of the costs for these enrollees will gradually rise to 10 percent in 2020 and remain at that level thereafter.
The 8 million new Medicaid enrollees in 2014 likely will grow to 11 million in 2015 and 12 million by 2020, according to government estimates. This will strain Medicaid’s ability to provide care, since many doctors don’t accept Medicaid patients because the government pays less for their care than for Medicare patients.
The health care law increases doctors’ Medicaid reimbursement rates to the same level as Medicare in 2013 and 2014. But after that, Congress would have to increase the rates again – which is no sure bet – or face the very real possibility of doctors turning away millions of Medicaid patients in 2015.
Higher reimbursement rates would help ensure there are enough providers to care for the expanded Medicaid caseload in 2015 and thereafter, said Dr. Jeffrey Cain, president of the American Academy of Family Physicians.
“To expand Medicaid without having enough providers is like giving everyone a bus ticket to a city, but not providing any more buses,” Cain said.