Effects of Medicaid Expansion Under the ACA: Preliminary Results

May 9, 2013
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Summary: Preliminary studies show mixed results in terms of costs/usage and diagnosis/treatment as a result of Medicaid Medicaidexpansion.

Summary: Preliminary studies show mixed results in terms of costs/usage and diagnosis/treatment as a result of Medicaid Medicaidexpansion.

The Patient Protection and Affordable Care Act (PPACA) is a comprehensive healthcare reform act which provides regulation for items such as Medicaid expansion, the creation of health insurance exchanges (marketplaces), clarifying and simplifying health insurance claim denials processes, creating Accountable Care Organizations (ACO)s, removing health insurance barriers such as lifetime limits and pre-existing conditions, and restructuring the methods in which physicians are paid for their services. This is not an all-inclusive list but rather just a few examples as to the topics included in the PPACA.

As of January 1, 2014, Medicaid expansion will become effective. It is interesting to note that individual states have the option to elect to expand Medicaid or not, as each state operates its own Medicaid program. Those that elect to expand will have the federal government pick up the tab for the first 3 years at 100% of the costs incurred. After 3 years, the amount of the federal portion will drop to 90% and foreseeably continue to drop thereafter.  As of today, 18 states and the District of Columbia have elected for expansion, with a possibility of more in the coming months. The expansion involves increasing access to Medicaid for Americans who earn less than 133% of the poverty level which translates to about $15,000 for 2014. There are higher limits for families.

What is the outlook for Medicaid? Certainly more Americans will qualify for Medicaid, but will more Americans take advantage of their new ACAcoverage options? Will there be an influx of newly eligible consumers rushing to setup doctor visits? Will there be a significant increase in healthcare spending? Will better data be available in terms of diagnosis and treatment of certain health issues?

A couple of studies have been conducted in Oregon which delve into some of these issues to arrive at results which may serve as predictors as to what we can expect. The study included a comparison of a select group of about 10,000 consumers who had access to Medicaid through a lottery system as compared to a select group who did not and was conducted over a 2 year period. The results indicated an increase in doctor’s visits, more money spent on healthcare, and more hospital visits. The health effects were mixed. No strides were made in terms of levels such as blood pressure and blood sugar, however this group did show reductions in the prevalence of depression and brought about feelings of increased financial security. Additionally, no significant changes to the diagnosis of hypertension or cholesterol were made. On the positive side, the probability that diabetes and depression would be detected were significant and noteworthy.

Is Medicaid expansion a good thing? Absolutely. Will there be higher healthcare costs incurred? Absolutely. Will the expansion begin with addressing healthcare issues and then lead to preventative in this group? More than likely. There will be significant costs occurred in the initial years following the expansion but should begin to decrease thereafter.

What are your thoughts on Medicaid expansion? Do you think these decisions should be decided upon by individual states? Do you think there will be an influx of Americans taking advantage of their newly eligible status? Do you think the paperwork required will preclude many in this group from participating?

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