5 Things to Know About the Impact of Medicaid Expansion

As a result of the Patient Protection and Affordable Care Act, more than 8 million people have signed up for health plans through the new exchanges. The reform law has also had a significant impact on Medicaid enrollment.

Here are five things to know about Medicaid enrollment in the wake of the PPACA's implementation and what the growing Medicaid population means for healthcare providers.

1. The PPACA originally required states to expand their Medicaid programs to cover those earning as much as 138 percent of the federal poverty level. However, the 2012 Supreme Court ruling on the healthcare reform law made Medicaid expansion optional. As of March 26, 26 states and the District of the Columbia had chosen to implement expansion in 2014, according to the Kaiser Family Foundation. Five states were still openly debating the issue, while 19 states had decided not to move forward with expansion.

2. Medicaid enrollment has been on the rise since the PPACA's major provisions took effect. Last week, HHS reported approximately 65 million people were enrolled in Medicaid and the Children's Health Insurance Program in April, and more than 1.1 million people enrolled between March and April. Comparing April data to enrollment numbers from July to September of 2013 (before the PPACA exchanges opened), more than 6 million additional people had signed up for Medicaid and CHIP, a 10.3 percent increase compared with the average monthly enrollment for July through September.

3. States that have expanded their Medicaid programs aren't the only ones seeing enrollment growth. According to an analysis from healthcare business advisory company Avalere Health, in the first quarter of this year, at least 17 states that didn't expand their programs still saw an increase in people signing up due to the "woodwork effect" — when people who were previously eligible but not enrolled later sign up because of increased outreach and awareness. For instance, Montana saw a 10.1 percent increase in enrollment during the first three months of 2014. Still, enrollment growth has been notably faster in expansion states. According to HHS, states that had Medicaid expansions in effect in April saw Medicaid and CHIP enrollment increase by 15.3 percent, compared with 3.3 percent overall in non-expansion states.

 4. The federal government will pay 100 percent of the costs for newly eligible Medicaid beneficiaries under expansion through 2016 and then scale back funding gradually to 90 percent in the following years. However, the increased enrollment under the PPACA could still place a financial strain on the states because of people who were previously eligible but not enrolled signing up because of the woodwork effect. The federal government pays about 60 percent of the costs on average nationally for the "woodwork" enrollees, meaning states must foot a considerable share of the bill. In California, for instance, Democratic Gov. Jerry Brown recently released a budget containing an additional $1.2 billion in spending for Medi-Cal, the state's Medicaid program.

5. However, Medicaid expansion is a financially positive development for hospitals. According to an analysis conducted by the Colorado Hospital Association of reported financial and volume data from 465 hospitals in 30 different states, self-pay charges in expansion states dropped from 4.7 percent of all charges in the first quarter of 2013 to 3.1 percent during the first three months of this year. Additionally, the average amount of charity care provided per hospital in the expansion states also declined by about 32 percent, from $2.8 million in the first quarter of 2013 to $1.9 million during the first quarter of this year.

More Articles on Medicaid Expansion:
More Than 1.7M People Await Medicaid Decisions
HHS Reports Continued Medicaid Enrollment Growth: 5 Key Findings  
Medicaid Expansion's Impact on Self-Pay, Charity Care Volumes: 9 Statistics 

 

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