How healthcare reform will affect Medicaid

by Cole Petrochko

Medicaid expansion under new healthcare reform laws could add millions of participants to the program over the next nine years and greatly decrease the number of uninsured Americans — with the federal government picking up most of the tab, according to a Kaiser Family Foundation report.

One set of projections in the report, prepared by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured, estimates that Medicaid enrollment will increase by 15.9 million participants and allow 11 million low-income people to leave the ranks of the uninsured by the year 2019. Another set of projections based on greater participation in Medicaid estimates the program would add 22.8 million people and reduce the number of uninsured individuals by 17.5 million.

According to the lower-participation analysis, Medicaid expansion would cost $464.7 billion by 2019, with the federal government covering $443.5 billion (95.4%) of the total cost and the remaining $21.2 billion requiring contributions from state funds.

These projections assumed that states would implement health reform at levels of Medicaid participation similar to current enrollment, with only 57% of newly eligible individuals taking advantage of the expanded access. In this lower-participation (“standard”) scenario, the number of uninsured adults with incomes under 133% of the poverty line (currently $14,404 for an individual) would decrease by 45% by 2019.

States with more limited Medicaid coverage and higher rates of uninsured individuals would see larger decreases in the uninsured, compared with states with broader coverage and fewer uninsured, according to the report.

An “enhanced outreach scenario” projects greatly increased participation in Medicaid resulting from a more aggressive outreach campaign at federal and state levels. In this scenario, federal spending would swell by $532 billion and state spending would rise by $43 billion, as Medicaid enrollment expands and demand for coverage increases. The higher projected Medicaid participation would result in a 70% decrease in the number of uninsured adults. In the “enhanced” scenario, Medicaid participation rates would include 75% of newly eligible and currently uninsured individuals, with greater participation among those presently eligible.

However, despite a 39% increase in Medicaid participation (especially in states with the most room to provide greater coverage) state spending would increase only minimally. Under this estimate, states would receive a lower match-rate, so the overall contribution by states would increase only 2.9% from projections in the less participant-heavy summary. The federal government’s share would increase about 27% over baseline projections.

Similarly to the standard scenario, states with low Medicaid coverage levels would see larger reductions in the uninsured. According to the report, a large influx of federal dollars and new coverage is also likely to reduce the need for state payments to cover uncompensated care.

Population estimates were based on data from the 2007 and 2008 Current Population Survey to provide baseline data, which the report noted likely under-represents Medicaid population information. Assessments on future data were based on growth estimates from the Census.

Cost data was derived from the Medical Expenditure Panel Survey and then modified based on differing health statuses for patients without insurance or with employer-sponsored insurance.

The authors of the report noted that it is difficult to predict the impact of new Medicaid outreach and enrollment efforts under healthcare reform, as well as how states will respond. So the analysis applied a uniform rate of enrollment (participation rate) among those eligible for Medicaid.

The Kaiser Family Foundation, headquartered in Menlo Park, Calif., is a nonprofit group that runs and partners with other groups to provide research and communication programs related to U.S. healthcare.

Cole Petrochko is a MedPage Today staff writer.