According to a brief released by the American Academy of Actuaries, state decisions regarding Medicaid expansion could significantly impact premiums for private insurance coverage. The brief found that premiums could increase in states that opt out of the Affordable Care Act’s (ACA’s) Medicaid expansion provision, as well as in those states that do decide to participate.
In states that opt out of the expansion, more people will flock to the new health insurance exchanges. The ACA makes available federal subsidies to people with incomes between 100 and 400 percent FPL to assist with the purchase of exchange health insurance coverage. The brief underlines that in the nonexpansion states, more people will be eligible to obtain such federal subsidies. This lower-income population tends to have higher-than-average health care costs, and thus insurance premiums will likely be higher than initial Congressional Budget Office (CBO) projections. Importantly, these increased premiums reflect the overall premium increase, which includes states that opt into the ACA’s Medicaid expansion.
In addition, without expanded Medicaid coverage in all states, ACA reinsurance would have to be spread among more people obtaining insurance in private plans, which also cause premiums to rise, the brief said. The funding for the reinsurance program is fixed and thus an increase in market enrollees would mean a lower per-enrollee payment. This would also cause a premium increase, according to the brief.
The report also said that federal guidance is necessary to clarify whether federal subsidies would be available to consumers purchasing exchange insurance in the states that both expand Medicaid and establish a Basic Health Plan (BHP). The ACA enables states to use federal subsidies for individuals that fall in the 133 percent to 200 percent FPL income bracket to assist with the purchase of a BHP.
Finally, the brief warned that states that opt out of the Medicaid expansion face a higher likelihood of employer penalization under the Act. Under the ACA, employers with 50 or more employees must pay penalties if any full-time employees receive a federal subsidy to purchase insurance in an exchange. Because employees are eligible to purchase insurance on the exchange only if ineligible for Medicaid and if their employer does not provide coverage, states without expanded Medicaid will put employers at a higher risk of paying such penalties.
March 26, 2013
A recent report
issued by the Society of Actuaries states that across the country, costs associated with covering medical claims for those in the individual market will increase by 32%. The Affordable Care Act (ACA) requires that if individuals not offered affordable health insurance through their employer, they can purchase insurance coverage through the individual market. This anticipated premium increase was calculated by considering 1) high risk pool enrollees, 2) employers no longer providing coverage, and 3) increased morbidity due to the additional enrollees.
January 18, 2013
According to an analysis released
this week by The New England Journal of Medicine, twenty-three governors, including four Republicans, support the Affordable Care Act's (ACA's) Medicaid expansion. Thirteen governors, all Republican, oppose the expansion, and fifteen (thirteen Republican and two Democrats) remain undecided. The analysis, conducted by Harvard's Benjamin D. Sommers and Arnold M. Epstein, also highlights comments made by governors in recent months regarding expansion. For governors who oppose the expansion, major themes include cost, lack of flexibility, and harm to self-reliance. For governors in support of the expansion, major themes include expansion of health care delivery, a natural progression building on previous expansions, and fiscal responsibility. Most undecided governors said that they needed more information regarding requirements, costs, and enrollment projections.
October 8, 2012
A report recently released
by the Robert Wood Johnson Foundation (RWJF) serves as a guide for states considering Medicaid expansion in the wake of the U.S. Supreme Court decision. The analysis in the RWJF report is limited to financial considerations related to a state’s decision to expand and therefore does not include many financial aspects related to the Affordable Care Act (ACA) as a whole (remaining mandatory provisions, for example).
There are six main areas of financial analysis that all states should consider that are included in this report:
1. Cost of newly eligibles
2. Cost of currently eligible but not enrolled
3. Administrative costs
4. Savings from transitioning current Medicaid populations to newly eligible group
5. Savings from reduction in state programs for the uninsured
6. Other revenue gains and savings.
August 1, 2012
The Government Accountability Office (GAO) recently released
a report on Medicaid expansion under the Affordable Care Act (ACA). The report does not take into account the June 28th United States Supreme Court decision.
Congress asked the GAO to report on the actions states are taking to implement the Medicaid expansion. This report addresses the following questions...
July 26, 2012
Beginning in 2014, the Affordable Care Act (ACA) provides for the expansion of Medicaid eligibility to adults with incomes up to 138% FPL ($15,415 for an individual or $26,344 for a family of three in 2012), which would make millions of currently uninsured adults newly eligible for the program. The Supreme Court ruling maintains the Medicaid expansion, but limits the Secretary’s authority to enforce it—if a state does not implement the expansion, the Secretary can withhold federal ACA expansion funds, but not existing federal program funds. This change in enforcement authority may impact state decisions to implement the expansion. A brief recently released
by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured provides an overview of current Medicaid eligibility for adults and data on uninsured adults to provide greater insight into the implications of the ACA Medicaid expansion on coverage for adults across states.
July 26, 2012
Two new reports, released by the New England Journal of Medicine, analyze the impact of Medicaid expansion under the Affordable Care Act (ACA). "The Supreme Court and the Future of Medicaid," authored by Timothy Stoltzfus Jost and Sara Rosenbaum, reviews both the Supreme Court’s majority and dissenting Medicaid expansion arguments and addresses three outstanding questions regarding the ruling.
On June 28th...
July 13, 2012
The Center on Budget Policy and Priorities (CBPP) published
an article which found that the Affordable Care Act's (ACA's) Medicaid expansion would "add very little to what states would have spent on Medicaid without health reform, while providing health coverage to 17 million more low-income adults and children." The paper reported that "contrary to claims made by some of the Medicaid expansion’s critics, the expansion does not impose substantial financial burdens on states," as the additional projected spending "equals 2.8 percent of what states would have spent on Medicaid in the absence of health reform."
October 27, 2011
recently published in Health Affairs, "Policy Makers Should Prepare For Major Uncertainties in Medicaid Enrollment, Costs, And Needs For Physicians Under Health Reform," presents findings from a simulation model using two nationally representative data sets to estimate Medicaid eligibility, participation, and population growth. The article warns that the number of Medicaid enrollments, associated costs, and number of new physicians needed could vary hugely under Medicaid expansion. The estimated number of people enrolling in Medicaid for the first time could vary by more than 10 million when the program changes are implemented in 2014. Additionally, costs could range from anywhere between $34 billion to $98 billion per year. The new enrollments could necessitate at least 4,500 and at most 12,100 new physicians. The study results indicate that policy makers should prepare for a great deal of unpredictability associated with Affordable Care Act's (ACA's) Medicaid reform.
June 28, 2012
The Supreme Court handed down its long-awaited ruling in the case of National Federation of Independent Businesses et al. v. Sebelius, Secretary of Health and Human Services, et al., upholding the individual requirement to maintain insurance coverage as a reasonable exercise of Congress’s taxing and spending authority and also upholding the constitutionality of the Medicaid coverage expansion. In a surprise coalition, Chief Justice Roberts was joined in his majority opinion by Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. The summary below describes the majority opinion, the concurring opinion (authored by Justice Ginsburg), and the dissenting opinion (written by Justice Scalia). Because the Court upheld the individual mandate, it never reached...