Medicaid Expansion Is Associated With Improved Hospital Finances, Study Finds

Hospitals in Medicaid expansion states saw “significantly increased” Medicaid revenue, decreased uncompensated care costs, and improved profit margins compared to hospitals in non-expansion states, according to a new study published in JAMA. Medicaid expansion was associated with a $2.8 million decline in mean annual uncompensated care costs per hospital and a $3.2 million increase in mean annual Medicaid revenue per hospital, relative to hospitals in non-expansion states. Medicaid revenue as a percentage of total revenue increased by 1.4 percentage points among states with Medicaid expansion and decreased by 0.1 percentage points among states without Medicaid expansion during this same period. The authors note that further study is needed to assess longer-term implications of Medicaid expansion on hospital finances.

States’ Decisions to Not Expand Medicaid or Allow “Grandmothered” Health Plans Associated With Higher Risk Scores

The ACA’s risk adjustment program uses average enrollee risk scores to determine which health plans have healthier and lower cost enrollees—low risk scores indicate healthier enrollees and high risk scores indicate less healthy enrollees. A Kaiser Family Foundation analysis of CMS risk adjustment data for the 2015 benefit year found that the average risk score across non-expansion states that allowed “grandmothered” health plans was 8% higher than in expansion states that did not allow grandmothered plans, and 3% higher than in expansion states that did allow them. This suggests that, on average, non-expansion states had sicker risk pools than expansion states, and expansion states that allowed grandmothered plans had sicker risk pools than expansion states that did not, though the report’s authors note the relationship is not necessarily causal. Grandmothered plans are non-ACA compliant plans purchased after the ACA was enacted but before the first open enrollment period. Allowing grandmothered plans, which are permitted to remain in effect through the end of 2017, may temporarily keep healthier enrollees out of the ACA individual risk pool.

10% of Uninsured Are in the “Coverage Gap” Due to Non-Expansion

Nearly one in ten of the 27 million nonelderly uninsured falls into the “coverage gap” (they earn too little to qualify for Marketplace subsidies and too much to qualify for Medicaid) due to their state’s decision to not expand Medicaid under the ACA, according to a Kaiser Family Foundation analysis of 2016 Current Population Survey data. In expansion states, 35% of the nonelderly uninsured population is eligible for Medicaid compared to 13% in expansion states. Overall, approximately 11.7 million (43%) of the uninsured are eligible for Medicaid or subsidized Marketplace coverage, and 5.4 million (20%) are ineligible for ACA coverage due to their immigration status.

Churning Rates Did Not Increase Under the ACA as Anticipated, Report Finds

A new study published in Health Affairs found little evidence of increased churning—the changing of insurance coverage—since the 2014 implementation of the ACA’s coverage expansions, despite expectations that churning rates would increase. The study compared churning rates in 2015 among low-income adults in Kentucky, which used a traditional Medicaid expansion; Arkansas, which expanded Medicaid through the “private option” (enrolling beneficiaries in private Marketplace plans); and Texas, which did not expand Medicaid. It also compared 2015 churn rates to those in 2013. Nearly 25% of survey respondents changed coverage during the previous twelve months, though there were no significantly different churning rates in the three states over time. Nearly 20% of those who churned did so because they gained insurance coverage; Arkansas and Kentucky respondents gained coverage at nearly twice the rate as those in Texas. The most common reason for churn across the study states was a change in a job or job-related coverage (33.8%).

Coverage Rates Improved Significantly for All Demographics, ASPE Report Finds

Demographic groups with the highest uninsurance rates in 2010 saw the largest drops in uninsurance as of the end of 2015, though coverage gains occurred across all income groups, racial and ethnic groups, ages, and geographies, according to HHS’s Office of the Assistant Secretary for Planning and Evaluation. Unsurprisingly, states that expanded Medicaid saw greater uninsurance reductions compared to non-expansion states (50% versus 32%); for non-elderly adults with incomes below 100% of FPL, expansion states saw a 54% reduction in uninsurance compared to 19% in non-expansion states. Among racial and ethnic groups, non-Hispanic Asians saw the largest decline (59%) followed by non-Hispanic Blacks (nearly 47%). The expansion of dependent coverage eligibility up to age 26 in 2010 contributed to a 52% increase in coverage rates among 18 to 25 year olds. The report notes that the uninsurance rate fell further in the first quarter of 2016, to a record low of 8.6%.

Medicaid Enrollment and Spending Growth Slowed in 2016

Total Medicaid spending growth slowed from 10.5% in FY 2015 to 5.9% in FY 2016 and enrollment growth slowed from 13.2% to 3.9%, according to the Kaiser Family Foundation’s 16th annual survey of Medicaid directors in all 50 states and the District of Columbia. (Kaiser published a separate report using the same survey data titled “Implementing Coverage and Payment Initiatives.”) Enrollment and total Medicaid spending growth is expected to slow further in 2017 though state spending is expected to increase slightly—from 2.9% to 4.4%—as the federal government’s share of spending for the expansion population reduces from 100% to 95%. While enrollment growth between 2015 and 2016 slowed for both expansion states (19.3% down to 4.8%) and non-expansion states (3.9% to 1.1%), spending growth differed between expansion and non-expansion states. Expansion states saw spending growth slow from 10.3% to 7.1%, while non-expansion states saw spending growth increase from 2.2% to 3.8%. Medicaid officials also identified the high costs of specialty drugs and payment increases for specific provider groups as putting upward pressures on spending.

New Health Affairs Issue Reviews ACA’s Impact on Access, Coverage, and Affordability

The October 2016 issue of Health Affairs features several studies on how the ACA improved access to care and impacted healthcare affordability, and the characteristics of those who gained coverage through Medicaid expansion and the Marketplace. Among other findings, the studies report that in expansion states, 17.4% of adults who were uninsured throughout 2013 gained Medicaid coverage in 2014, compared with 5.6% in those states between 2012 and 2013. People who gained coverage through Medicaid or the Marketplaces in 2014 were far more likely to obtain a usual source of care and receive preventive care services than those who remained uninsured. Additionally, fewer Marketplace enrollees in expansion states reported trouble paying medical bills compared to those in non-expansion states. One of the studies found that those who gained Marketplace or Medicaid coverage in 2014 were more likely to have at least one chronic condition and may have had a “predisposition” to using healthcare. This suggests that future enrollees from the remaining population of long-term uninsured people may have different characteristics than those who enrolled in 2014.


Foundation Report Highlights Impact of ACA Implementation

Kentucky's uninsurance rate for non-elderly adults fell to a historic low of 8.9% in 2016, with 56% of the remaining uninsured citing cost as the main reason for remaining uninsured, according to a semi-annual study of the ACA’s impact on health insurance in the State. The report, which was prepared by the State Health Access Data Assistance Center (SHADAC) for the Foundation for a Healthy Kentucky, found a 10% decline in number of Kentuckians who had difficulty paying their medical bills between 2012 and 2014, but no change in the number of people delaying or skipping care due to cost. Between 2012 and 2015, there was a 77% decline in charity care and self-pay charges. The report comes amid the State’s recent submission of an 1115 waiver application that proposes two new coverage options for the Medicaid expansion population: a premium assistance program for individuals with access to ESI; and a high deductible Medicaid managed care plan.