Medicaid Enrollment Expected to Increase by 16 Million in 8 Years

Arlington, Virginia—The Congressional Budget Office and other forecasters estimate that by 2019 an additional 16 million people in the United States will enroll in Medicaid, thanks to provisions included in the Patient Protection and Affordable Care Act. As a result, health insurers and others involved in the healthcare industry will spend the next few years preparing for the expansion and adapting to the new environment. John Kaelin, senior vice president of health reform implementation at UnitedHealthcare, provided an overview of the new Medicaid-related rules during a keynote session at the Medicaid Managed Care Summit titled Medicaid Expansion: Timeline, Approach, and Execution. UnitedHealthcare insures 3 million Medicaid beneficiaries in 24 states and the District of Columbia, according to Mr. Kaelin. Most of the beneficiaries are women and children. Mr. Kaelin noted that the Affordable Care Act would guarantee that all people are insured beginning in 2014, with the reforms fully phased in 5 years later. The bill will add an estimated 32 million uninsured people who will likely enroll in Medicaid or state-run health insurance exchanges that are expected to open in 2014. In 2007, of the 45 million people in the United States who did not have insurance, 37% had incomes below the federal poverty line (FPL) of $10,210 for individuals and $20,650 for a family of 4, according to the Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of the March 2008 current population survey. In 2014, people will be eligible for Medicaid if their modified adjusted gross incomes are <133% of the FPL, with the expansion mainly affecting adults. Mr. Kaelin estimated that there would be 16,430,120 people enrolled in Medicaid in 2019, a 32% increase from today. Thirty states are expected to have increases ≥40%, including Montana (84%), Nevada (72%), Utah (66%), North Dakota (60%), Colorado (57%), Kansas (57%), Texas (56%), Oregon (52%), Wyoming (52%), and Virginia (51%). Because Medicaid is already established, Mr. Kaelin said the program will be able to handle the additional people. He mentioned that an advantage of Medicaid is that it has established enrollment systems, payment systems, provider networks, and managed care contracts with states. Although federal law sets the minimum Medicaid eligibility levels, many states extend their benefits beyond those minimums, particularly to children, according to Mr. Kaelin. He cited a September 2010 Kaiser Family Foundation report on Medicaid and the uninsured that provided the median income eligibility thresholds in 2009 for Medicaid and the Children’s Health Insurance Program. The median threshold for children was 235% of the FPL compared with 185% of the FPL for pregnant women, 74% of the FPL for the elderly and disabled individuals, 68% of the FPL for working parents, and 41% of the FPL for nonworking parents. Mr. Kaelin cited studies that indicated the people who are not currently on Medicaid but will receive Medicaid coverage beginning in 2014 will mostly be poor and low-income adults who do not live with an eligible child and do not have a disability. Many of them will not have had insurance before becoming part of Medicaid, and they will have relatively high healthcare needs. A July 2010 report from the Center on Budget and Policy Priorities used data from the Census Bureau’s 2009 Current Population Survey and the 2007 Medical Expenditure Panel Survey. It defined poor people as having incomes below the FPL. The authors found that 30% of poor adults without children have fair or poor general health compared with 20% of poor adults who have children. In addition, 20% of poor adults without children have fair or poor mental health compared with 11% of poor adults who have children, and 29% of poor adults without children have ≥2 chronic conditions compared with 17% of poor adults who have children. Furthermore, 47% of poor childless adults are uninsured at any point during the year compared with 40% of poor parents and 17% of poor children. Among uninsured childless adults, those with incomes below the FPL incurred lower average annual healthcare costs compared with those with incomes above the FPL ($93 vs $229), but it is more expensive to treat people below the FPL who fall in the 90th percentile of annual health costs compared with those above the FPL who are in the 90th percentile ($5235 vs $3618). Mr. Kaelin said 60% of poor, uninsured childless adults said they skip medical care because of cost concerns, so they are more costly to treat when they become sick and visit physicians. Mr. Kaelin also discussed an August 2010 report from the Center for Health Care Strategies, Inc (CHCS) in partnership with Mathematica Policy Research titled Covering Low-Income Childless Adults in Medicaid: Experiences from Selected States. UnitedHealthcare, Aetna, and the Robert Wood Johnston Foundation supported the report, which looked at 10 states that have Medicaid programs for low-income childless adults to better understand the incoming population that will be joining Medicaid in 2014. During his presentation, Mr. Kaelin identified 6 states (Arizona, Indiana, Pennsylvania, Maine, Oregon, and New York) that provide coverage to low-income adults who do not have children through Medicaid 1115 waivers or state-only funding. For instance, in Indiana, which has covered low-income adults since 2008, childless adults have a higher prevalence of heart disease and diabetes and incur double the inpatient hospital and prescription drug costs compared with other Medicaid groups. In Maine, which has covered adults whose incomes are ≤100% of the FPL since 2002, childless adults had higher per member per month (PMPM) costs than people in the Temporary Assistance for Needy Families (TANF) program. In addition, the highest 5% of beneficiaries categorized by cost accounted for 44% of the total healthcare expenditures. Plus, high-cost beneficiaries (those with >$10,000 in total annual paid claims) were enrolled for an average of 33 months, significantly longer than other beneficiaries. Since 2001, Arizona has covered low-income adults with the same Medicaid benefits as other populations. Mr. Kaelin said the childless adults cost an average of $7361 per year compared with an annual average of $5305 for those in the TANF program and $9428 for disabled adults and those in the federal Supplemental Security Income program. Pennsylvania’s program is administered through a general assistance program and covers childless adults whose incomes are ≤30% of the FPL. According to Mr. Kaelin, people enrolled in the program had an average PMPM cost of $840 compared with an average PMPM cost of $388 for people enrolled in the TANF program whose incomes are ≤30% of the FPL. Oregon has covered adults whose incomes are ≤100% of the FPL since 1994. Mr. Kaelin said childless adults in Oregon had 2 times as many inpatient admissions, 2 times as many emergency department visits, 3 times as many visits related to mental health and substance abuse problems, and 2 times higher PMPM costs compared with adults who have children. New York also covers adults whose incomes are ≤100% of the FPL. According to Mr. Kaelin, childless adults in New York whose incomes are <78% of the FPL are 4 times more costly than childless adults whose incomes are >78% of the FPL. When preparing for the influx of Medicaid beneficiaries, insurers must consider several options that will help determine how they set their rates, according to Mr. Kaelin. These include the estimated number of individuals who will enroll in Medicaid each year; their health status; their health needs, such as chronic conditions, behavioral health, and substance abuse; and the associated increase in demand for healthcare services. Mr. Kaelin also said individuals who join Medicaid in 2014 and beyond are required to receive certain benefits, which are not yet defined but will likely include inpatient and outpatient hospital services, physician services, laboratory and x-ray services, mental health and substance abuse services, and prescription drug benefits. In addition, Mr. Kaelin said that managed care organizations must consider the requirement that states increase Medicaid payment rates to primary care physicians to the same rates as Medicare payment by 2013 or 2014. Mr. Kaelin cited a December 2010 CHCS report that said the increased payments will force plans to identify the additional services covered, the providers who are eligible for the additional money, and the places of service that will be eligible. Mr. Kaelin indicated that health plans will have a major impact on Medicaid expansion by utilizing their provider networks, helping new enrollees to manage their health and the system to lower its costs, focusing on quality initiatives, and partnering with states and providers to innovate in delivery and payment systems.