Who will comprise Medicaid's expansion population?

While state Medicaid programs have projected the expected number of individuals coming in to the program in 2014 as a result of health care reform, it's less understood who these individuals will be. Are they a relatively healthy group, or are do they have complex, costly health care needs?

"That's the million dollar question. There are many folks trying to put the pieces of the puzzle together," says Allison Hamblin, director of complex populations for the Hamilton, NJ-based Center for Health Care Strategies (CHCS). "Once states determine how to deal with enrollment, the next step is quickly assessing the needs of new enrollees."

Don't make assumptions

The picture that is emerging of the estimated 17 million Americans who will become newly eligible for Medicaid in 2014 suggests that it's a mistake to make blanket statements about this group.

"People carry around a lot of assumptions about who these folks are. This is a heterogeneous population," says Alan Weil, JD, MPP, executive director at the National Academy for State Health Policy in Washington, DC.

"There certainly are some new eligibles who are sick and maybe have some mental health or substance abuse issues, and we need to be prepared for that," says Mr. Weil. "There are some who are really quite disabled but don't meet the [Supplemental Security Income] SSI disability standards. There also are a lot of people who are basically healthy and are just disconnected from the insurance system. It's not, 'We're getting a bunch of these.' It's important not to generalize."

Mr. Weil says that "the good news is there are some good reports on this topic that are disentangling this from a data perspective," he says. "They are based on data — not assumptions."

Two generalizations are either that there is a lot of pent-up demand for health care services in the population, or they are generally a healthy group. "In some segments, there will be pent-up demand. And a lot are healthy, but not all," says Mr. Weil. "So, it's not all one answer."

Put information to use

"One good thing is that we actually do know something about this population, and that can help us prepare," says Mr. Weil. He adds that this information is important for state Medicaid directors to have for several reasons.

One reason is the ability to do more effective outreach for enrollment. "Because these people are newly eligible, they are not going to magically know it. We will have to reach out to these communities and find these folks," says Mr. Weil. "The more we know about who they are and where they live, the more likely we will be able to reach and enroll them."

With more knowledge about the health needs of the population, Medicaid programs can work more effectively with the managed care plans or traditional safety net providers who will be delivering care. "This is an opportunity to talk about what kind of care coordination you will need to meet the needs of the population," says Mr. Weil.

The needs of high-cost clients in the newly eligible group are not homogeneous, either. These may involve substance abuse, physical disabilities, or multiple chronic conditions.

"There is not a 'one size fits all' approach to high-cost Medicaid folks," says Mr. Weil. "The important thing is to engage with providers with whatever knowledge you do have about the health status of the population."

Information about the population's health status will become important during negotiation of rates with payers. "Given the heavy reliance on managed care, with a large influx of new people, the plans will want to build in a cushion, so that they don't lose money on this group. Naturally, they will err on the high side with their estimates," says Mr. Weil.

Even with available data, there is clearly some uncertainty about how expensive the new population will be. "In the early years, it may be that a risk-sharing arrangement is worked out to make sure that the state isn't paying too much, but the plans don't go under," says Mr. Weil.

"Woodwork" is one concern

Brian Blase, a policy analyst at the Heritage Foundation's Center for Health Policy Studies in Washington, DC, says that the actual numbers of new enrollees will vary "pretty drastically by state. States which already have pretty generous eligibility, such as Maine, Massachusetts, New York, Hawaii and Vermont, won't experience as robust enrollment. Others are going to be more impacted."

The Heritage Foundation found that estimated enrollment increases by state varied, ranging from an expected 9% increase for Massachusetts to an expected 66% increase for Nevada. "As it turns out, the states that had the most opposition to the bill will be the ones most dramatically impacted," says Mr. Blase.

Mr. Blase says that there is some evidence that indicates the expansion population is going to be "relatively unhealthy" compared to the existing Medicaid population. He points to an analysis done by the United Health Group, based on Medical Expenditure Panel Survey data, which estimated that the cost to cover adults without dependent children is 15% higher than for parents.

"It's hard to know exactly how accurate these estimates are, but really unhealthy individuals — those who are disabled and can't work — will probably already qualify for Medicaid or Medicare," says Mr. Blase.

The "woodwork" effect is a concern for states. "An enormous amount of people are eligible for Medicaid, but they just haven't enrolled. A major concern for states is — if people respond to advertising — that if someone doesn't have insurance, they will pay a penalty," says Mr. Blase.

If these individuals are deemed eligible under the old criteria, then the state's federal match rate would be the lower standard match rate. "This is all happening when states are experiencing the worst fiscal crisis in a generation," says Mr. Blase.

According to a report from the Kaiser Commission on Medicaid and the Uninsured in Washington, DC, 41 states already cut reimbursement rates in 2009 or 2010, and 39 states cut either Medicaid pharmaceutical benefits or medical benefits.

"One of the main criticisms of Medicaid is that individuals don't have access to physicians, so they utilize ERs. That problem, presumably, is becoming exacerbated because of the recent cuts to provider rates," says Mr. Blase.

Health care reform requires that states increase primary care rates to Medicare levels for 2013 and 2014, with the federal government paying the cost. "But there's a problem. In 2015, funding for that goes away. At that point, doctors are going to have had elevated rates for two years," says Blase. "States are either going to continue that, or cut the rates and have to anger doctors and worry about access. Either one is going to be problematic for different reasons."

Contact Mr. Blase at (202) 608-6255 or Brian.Blase@heritage.org., Ms. Hamblin at (609) 528-8400 or ahamblin@chcs.org., and Mr. Weil at (202) 903-0101 or aweil@nashp.org.