Other states’ experiences with expanding Medicaid reveal the likely impact on Florida

EXECUTIVE SUMMARY

Supporters of the Affordable Care Act’s optional Medicaid expansion have made a series of promises to Florida lawmakers as they decide if the government health program should include parents and childless adults earning up to 138 percent of the federal poverty level. These promises include a reduction in the rate of uninsured, gradual enrollment increases, low and predictable costs, and a reduction in the amount of charity care.

These same promises were made in other states that previously expanded their own Medicaid programs. Because of this, Florida lawmakers now have an opportunity to see how Medicaid expansion impacted those states, and if supporters’ promises were actually kept.

This report takes a closer look at Arizona, Maine and other states that expanded Medicaid. It finds that, unfortunately, expansion supporters have a poor track record of keeping promises.

  • Enrollment among the expansion populations was much higher and faster than the slow and gradual enrollment that was projected.
  • Medicaid expansion had little impact on the rate of uninsured. Arizona’s uninsured rate actually increased in the five years after expansion, while Maine’s did not change.
  • Per-person costs for the new expansion populations were much higher than projected—particularly for the childless adult populations.

The experiences of these other states are instructive for Florida lawmakers. In those states, promises made by supporters of Medicaid expansion were unable to be kept. The same will likely be true for Florida if lawmakers ultimately decide to expand.

Florida lawmakers are faced with a choice. The federal Affordable Care Act (ACA) urges states to expand their Medicaid programs for those earning up to 138 percent of the federal poverty level. However, a recent decision by the U.S. Supreme Court makes the expansion voluntary for Florida, and all states.

Fortunately, Florida has the benefit of reviewing the experiences of other states that have already expanded Medicaid eligibility to a similar population. Before making any decision, state lawmakers should carefully review these experiences to better understand how the optional expansion could affect Florida.

ARIZONA

In 2000, Arizona voters enacted Proposition 204, which increased Medicaid eligibility for parents and created a new eligibility class for childless adults. The new eligibility income limit was set at 100 percent of the federal poverty level.

At the time, Arizona predicted that enrollment among newly eligible parents and childless adults would slowly phase in during the first four years of the expansion and only modestly grow thereafter. This was not to be the case.

Enrollment among parents was expected to phase in from 17,000 in 2002 to 41,000 in 2005. Thereafter, enrollment growth was expected to be small and predictable. By 2010, just 47,000 parents in the expansion population were expected to enroll. In reality, parents in the expansion population grew from 39,000 in 2002 to a whopping 150,000 in 2010.

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Similar projections were made for the childless adult expansion population. Enrollment was expected to phase in from 29,000 in 2002 to 67,000 in 2005. By 2010, enrollment of the childless adult population was expected to be just 75,000. In reality, childless adult enrollment grew from 54,000 in 2002 to more than 200,000 in 2010.

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Arizona predicted the per-person cost of both the parent population and the childless adult population would be similar. In reality, the cost to provide coverage to childless adults was much higher than the cost to cover low- income parents. By 2010, the cost to provide coverage to childless adults was more than twice as high as the cost to cover parents.

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As a result of these assumption flaws, the cost to expand eligibility far exceeded initial estimates. Indeed, the actual costs of Arizona’s Proposition 204 Medicaid expansion have been more than four times what was projected. Between 2002 and 2008, Arizona expected to spend a total of just $2 billion on the expansion populations. In reality, it spent $8.4 billion during that time.

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Despite Arizona’s skyrocketing Medicaid enrollment, the Proposition 204 expansion did little to reduce the number of uninsured residents. In 2002, for example, approximately 18.7 percent of the non-elderly population was uninsured. By 2011, that share had actually increased to 19.4 percent. The share of people with private insurance, on the other hand, dropped to 55.5 percent in 2011, down from 61.8 percent in 2002.

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MAINE

Arizona was not the only state to experiment with expanding Medicaid eligibility. In 2002, Maine followed suit, submitting a waiver to the federal government to expand eligibility to include childless adults. At the time, Maine predicted a stable expansion population of just 11,000 individuals. In reality, however, enrollment reached nearly 17,000 within 14 months. Within two years, enrollment had peaked at 25,000. Financial difficulties caused the program to be capped and re-opened at various times, causing sharp drops and spikes in enrollment. The program currently has nearly 11,000 enrolled individuals, while another 24,000 individuals are on a waiting list.

Like in Arizona, this population proved expensive to cover. Even though the expansion population has limitations on inpatient stays, outpatient visits and prescription drug coverage, they still cost more than $5,000 per year to cover in 2012, compared to $1,168-$2,460 per year for parents.

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Despite Maine’s expansion of Medicaid eligibility, the share of Maine residents without health insurance remained relatively unchanged. In 2002, approximately 12 percent of the non-elderly population was uninsured. By 2011, that share was still 12 percent, having fluctuated very little during the last decade. The share of people with private insurance, on the other hand, dropped to 59 percent in 2011, down from 66 percent in 2002.

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Expanding Medicaid also had little effect on reducing charity care. In 2000, charity care in Maine amounted to roughly $40 million per year. By 2011, charity care costs had risen to $196 million per year. Increasing Medicaid eligibility and enrollment appears to have had little effect on the amount of charity care delivered by Maine medical providers.

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OTHER STATES

Expanding Medicaid eligibility to childless adults has also been tried in Delaware and Oregon under federal Section 1115 demonstration waivers. In 1996, Delaware expanded its Medicaid eligibility to include childless adults earning up to 100 percent of the federal poverty level. In 2003, Oregon followed suit and expanded eligibility to childless adults earning less than 100 percent of the federal poverty level. While Delaware provides full Medicaid benefits, Oregon provides only limited benefits, defined by the state’s prioritized list of services.

As in Arizona and Maine, childless adults have proven more expensive to cover than low-income parents in both Delaware and Oregon. In 2007, the median cost to cover childless adults in Delaware was 1.9 times the cost of covering low-income parents. In Oregon, even with more limited benefits, the cost to cover childless adults was 1.7 times the cost of covering low-income parents.

The Medicaid expansions in Utah, Vermont and Washington, D.C. followed similar patterns, though to a lesser extent in Utah and Vermont because childless adults received more limited benefits.

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Despite more people enrolling in Medicaid in both Delaware and Oregon, there was little change in the number of uninsured residents. The share of non-elderly residents without health insurance did not decrease between 2002 and 2011 in either state.

In both states, however, the share of residents with private insurance dropped significantly.

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The Medicaid expansions in Michigan and Utah followed similar patterns, with the rate of uninsured increasing in the years following expansion. Michigan’s rate of uninsured increased by 2.3 percentage points in the seven years after expanding eligibility to childless adults earning less than 35 percent of the federal poverty level. Utah’s rate of uninsured increased 1.9 percentage points in the nine years after expanding eligibility to include childless adults earning less than 150 percent of the federal poverty level. On the other hand, Oklahoma did see its uninsured rate decline slightly after expanding Medicaid eligibility to include childless adults earning less than 200 percent of the federal poverty level. But even that slight decline amounted to less than one percentage point six years after the expansion took effect, with an uninsured rate still hovering at 17 percent.

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Medicaid Expansion: We already know how the story ends.
Medicaid Expansion: We already know how the story ends.
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