2018 MIDTERM ELECTION

Time: D H M S

Expanding Medicaid in all 50 states would shrink the QHP enrollment pool by 2.5 million people.

Yesterday I noted that if the Republican Party really wants to damage the Affordable Care Act, they could do so quite easily...by helping the Affordable Care Act:

Put another way: 11.7 million people selected QHPs during 2015 open enrollment, of which roughly 10.3 million are currently enrolled nationally. If every state had expanded Medicaid as of the beginning of this year, only around 9.5 million people would have selected QHPs and only around 8.4 million would still be enrolled in them today.

That's right: As Sprung put it last March, by refusing Medicaid expansion, red state governors and legislatures drove almost 2 million private plan enrollees to federal exchange.

The short version is that around 1.9 million people currently enrolled in private policies via the ACA exchanges live in non-expansion states and are between 100%-138% of the Federal Poverty Level. That means that if their states were to expand Medicaid after all, they would no longer be eligible for federal tax credits for private policies and would instead be shifted over to Medicaid itself.

However, as Andrew Sprung pointed out a little later on, this only includes those currently enrolled in private QHPs. What about the remaining pool of potential enrollees? Remember, there are still plenty of people out there who could enroll via the exchanges who haven't yet; according to the Kaiser Family Foundation, the total potential exchange-purchased QHP pool nationally is just over 28 million, of which only 11.7 million had selected a plan as of last February and around 10.3 million of which are currently enrolled in effectuated policies. That's roughly 36.8% of the total, leaving another 17.8 million potential enrollees to be added over the next few years.

As Sprung notes in his update:

It occurs to me that this estimate excludes those in the 100-138% FPL range in nonexpansion states who declined to buy subsidized QHPs and remain uninsured, This spring, Avalere Health found that 76% of those in the 100-150% FPL range who were eligible for subsidized private plans did in fact buy them. If that's accurate, the percentage is probably somewhat higher below 138% FPL, as silver premiums are capped at 2% of income below that threshold.

Now, Andrew and I continue to have a difference of opinion about the exact proportion of current enrollees in the 100-150% range who are in the 100-138% range; he thinks it's lower, I think it's higher. He could be correct. He also notes that:

Keep in mind, too, that takeup is much higher at the bottom of the income distribution. Avalere was limited, like us, to considering 100-150% FPL as a group, but takeup was probably higher under 138% FPL, as silver premiums below that level can't go above 2%, and at 138-150% they're 3-4%. That goes for CSR, too, since the higher your income, the harder the premium spread between bronze and silver bites.

In other words, some of these numbers are a bit fuzzy; they might be higher in some areas, lower in others. However, assuming that it is around 1.9 million at the moment, and assuming that the "76% of the 100-150% range has enrolled" figure holds true at the 100-138% range as well, that means the total number of people in non-expansion states in that range should be roughly 2.5 million total:

  • 1.9 million = 0.76 x X
  • 1.9 million / 0.76 = X
  • 1.9 million / 0.76 = 2.5 million

In other words, in addition to the 1.9 million current exchange enrollees who "should" be on Medicaid right now, there's another 600,000 or so uninsured folks across those 21 non-expansion states who "should" be as well.

If every one of the 21 remaining states were to expand Medicaid under the ACA, the total potential exchange QHP enrollment pool would shrink from 28 million down to around 25.5 million.

Obviously I was being snarky about this "hurting" the ACA; the only "damage" which the Obama administration would suffer would be that ACA exchange QHP enrollment would drop, which would make for some embarrassing, sky-is-falling headlines...but keep in mind that:

1. The Medicaid expansion part would be a far bigger win for the ACA than losing a couple million private plan enrollees (since, after all, the point is supposed to be to get as many people covered at as low a cost as possible, not to fatten the insurance company's wallets even further); and

2. Just as importantly, losing those 1.9 million - 2.5 million enrollees may actually LOWER premium rates. Why? Because private insurance policy rates are based in large part on the risk pool. I have no idea what the general health or medical condition is of people in the 100-138% income range, but my guess is that they tend to be considerably sicker and more expensive to treat than those at a higher income level.

If so, moving these folks over to Medicaid could be the best possible outcome for everyone: The enrollees would have decent coverage which likely costs them less than the QHPs even with massive federal tax credits; the insurance companies would have unloaded a big chunk of their priciest customers; the rest of the enrollees from 138% and higher would (presumably) see lower rate hikes. Of course, there's no guarantee of this: 29 out of 50 states already have expanded Medicaid, and at least some of them (Maryland, for instance) may still be looking at substantial rate hikes, but it's possible this could have an impact.

What about the impact on the federal budget? Well, the numbers vary from state to state, of course, but I plugged in a single 45 year old earning $11,800/year (just barely above 100% FPL) in Virginia (a non-expansion state) and came up with a $298.84/month federal tax credit. That's about $3,600/year. To this you have to add the Cost Sharing Reduction expenses covered by the feds; I'm not sure how much this adds up to, as it varies by plan and by enrollee, but I'd imagine it's a couple thousand dollars on average, bringing the cost to the federal government up to roughly $5,600 or so per enrollee, give or take.

Compare this to the cost of a single Medicaid enrollee. This, too, varies greatly from state to state as well as by type of enrollee, but in Virginia, it averages just below $6,000 per person. Since the federal government would be paying 90% of that, the budget impact would be around $5,400 per enrollee.

In other words, on paper, moving these folks from heavily-subsidized QHPs over to Medicaid probably wouldn't have much of an impact on the federal budget one way or the other; it would just be an actuarial/accounting change.

Then again, this all assumes that these states actually do expand Medicaid, which isn't likely to happen any time soon anyway.