Medicaid expansion costs $1k more per person than expected

CMS' Office of the Actuary reported last week Medicaid costs in 2014 were significantly higher than expected due to newly covered adults' pent-up need for health services.

Newly eligible adults in expanded Medicaid programs incurred average benefit costs of $5,517, which is about $1,000 higher than expected and 19 percent greater than non-newly eligible adults' average benefit costs of $4,650, according to the report.

Overall expenditures for newly eligible adults are estimated to total $23.7 billion in 2014. The Office of the Actuary projected that these costs would amount to $460 billion between 2014 and 2023. Most of this bill — $430 billion — is expected to be footed by the federal government, while states are expected to pick up the rest, according to the report.

The unpredicted discrepancy in the actual cost and estimated cost for newly eligible Medicaid beneficiaries may be due to higher than expected capitation rates for newly eligible adult enrollees in Medicaid managed care programs and because those who were previously uninsured had a number of unmet medical needs to address. The report said CMS expects the effects of pent-up demand to decrease substantially going forward and additional information will be incorporated into Medicaid managed care plan capitation rates.

The actuaries also reported that total number of newly eligible adult enrollees have blown by previous estimates. In this report, the actuaries estimated an average of 5.7 million newly eligible adult enrollees received Medicaid coverage over the calendar year, according to the report. However, 2013 projections put this number at about 4.9 million enrollees over the course of the year.

The actuaries now estimate that newly eligible adult enrollees will grow to 12 million by 2023.


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