How accurate are Medicaid projections on expansion population?

Health care reform "is extraordinarily complex — a massive, truly unprecedented social experiment," says Kip Piper, MA, FACHE, president of the Health Results Group in Washington, DC. "As Rick Foster, the CMS [Centers for Medicare & Medicaid Services] Chief Actuary, has correctly pointed out, there really is no way to precisely estimate enrollment."

The Congressional Budget Office projects Medicaid expansion will add 16 million enrollees by 2018, while CMS' Office of the Actuary projects 20 million new enrollees.

"With an aggressive outreach campaign by HHS [the Department of Health and Human Services] and states, the Medicaid expansion population could easily reach 23 million," says Mr. Piper.

However, enrollment of newly eligibles will vary greatly by state, he says. For example, because of relatively low current Medicaid eligibility levels and higher than average rates of uninsured, Medicaid enrollment in Texas will increase by 1.8 million to 2.5 million, California between 2 million and 3 million, and Florida between 950,000 and 1.5 million, says Mr. Piper.

"In contrast, states with low levels of uninsured and broader Medicaid coverage will see modest expansion of Medicaid rolls," says Mr. Piper. "Massachusetts is likely looking at 30,000 to 75,000 more Medicaid eligibles."

Many factors at work

The number of newly eligibles coming onto the program will depend on outreach, how individuals and employers respond to the new federal mandates, the health of the economy as of 2014, levels of crowd out, interplay between Medicaid and State Exchanges, and many other factors, Piper says.

"The factors are also interactive, making projections harder," says Mr. Piper. "Crowd out of employer-sponsored insurance is inevitable. This will be significant and is likely to grow over the first few years of Medicaid expansion."

At least 30% of the new enrollees will move from private insurance coverage to Medicaid. "In other words, if Medicaid expansion to 133% FPL increases Medicaid enrollment by 20 million, only about 14 million will be newly insured," says Mr. Piper. "Crowd out will vary considerably by state."

The internal projections of states will be continually refined as we get closer to implementation, as HHS releases rules and guidance, and as economic conditions evolve, says Mr. Piper.

"Because of enhanced federal match, Medicaid expansion will hit state budgets more in the out years," says Mr. Piper. "Administrative costs will hit states more immediately."

Showcase best practices

States will need to make a massive array of changes to Medicaid policies and systems, build capacity to handle the huge volume of applications, and adapt Medicaid managed care programs to serve the expansion population through benchmark plans, Piper says.

This must happen at the same time they build state Health Insurance Exchanges, and create linkages between Medicaid, the Children's Health Insurance Program, and HIEs for eligibility and subsidy determination, he says.

"Therefore, enrollment projections will be critically important to planning and budgeting for administrative costs," says Mr. Piper. "There will be many unhappy governors and state budget directors when they hear about the cost of implementation."

The newly announced higher federal matching funds available for Medicaid-related systems for HIEs and Medicaid expansion will help. "But federal funds for states to implement exchanges is limited, and likely to become more restricted during Congressional appropriations battles," notes Mr. Piper. "States must operate exchanges at their own expense, either through state budget, taxes, or user fees."

Pent-up demand

Many new Medicaid eligibles will come from the long-term uninsured. "They will have pent up demand for services, a pattern of avoiding care and relying on emergency rooms, and a serious need for preventive and primary care," says Mr. Piper.

The primary care capacity may not be adequate to handle the influx of newly insured. "Patient education, wellness programs, cultural competency, language competency, and medical homes will be essential," says Mr. Piper. "It will be a challenge, but Medicaid expansion is a great opportunity for states and Medicaid health plans to showcase the many best practices built up in recent years."

As systems of care are developed for the expansion population, these need to take into account that many individuals will bounce between Medicaid eligibility and the HIEs from year to year, he says.

"Ideally, Medicaid health plans will also participate as Qualified Health Plans in exchanges," says Mr. Piper. "This would allow individuals to stay in plans and maintain continuity of care; the benchmark benefit designs will be very similar."

Contact Mr. Piper at (202) 558-5658 or piper@healthresultsgroup.com.