Exchange Enrollees Opting for Medicaid, Threatens ACA

Published Online: November 01, 2013
Katie Sullivan
A recent analysis shows that people are electing to enroll in Medicaid instead of buying private health insurance on the 15 state-based health insurance exchanges. It’s projected that if this trend continues, there will not be enough healthy young people buying health insurance to make the system work.

"We’re seeing a huge spike in terms of Medicaid enrollments,” executive director of the National Association of Medicaid Directors Matt Salo said.

In Washington, 87% of the 35,000 newly insured signed up for Medicaid. Kentucky saw 82% of 26,000 new enrollees opt for Medicaid, while 64% of the 37,000 enrollees in New York obtained Medicaid accounts. Some experts suggest that the process to enroll for Medicaid is not only easier than that for private insurance, but Medicaid also does not have a premium—and is the only insurance plan option for people who are eligible. Almost all private plans on the state exchanges have some form of a premium, even with a federal subsidy.

“There are no comparisons between those processes,” Kip Piper, a Medicare and Medicaid industry consultant, said in a recent article. “It’s not like comparing apples to apples or even apples to oranges. It’s apples to poodles.”

“This is not really a surprise, but free is easier to sell than low cost—and Medicaid enrollment is free,” adds Alan Weil, executive director of the National Academy for State Health Policy. “It’s a lot easier to close the deal if at the end of the process, you can offer someone a product without a premium—even if the exchange premium is highly subsidized.”

While high Medicaid enrollee numbers were expected with the expansion of the federal poverty line under the Affordable Care Act, demand has been substantially greater than estimated. Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said that participation within the new marketplaces must shift to the young and healthy in order for the program to remain viable. “It’s not about how many people sign up in Medicaid, but how many sign up in the exchanges,” he said.

Gail Wilensky, a former Medicaid director, says that the reported numbers are causing considerable concern in the insurance industry, agreeing that the marketplace requires a substantial amount of healthy adults to purchase insurance in order to cover the risk base.

"Either the private insurance enrollments come up somewhere around the expected amount or there’s going to be a problem,” she said. “You need a volume and you need a mix of people that are healthy as well as high users in private insurance, in order to have it be sustainable."

Around the Web

Medicaid Enrollment Surges Ahead of ACA Sign-ups [Politico]

States Report Medicaid Surge After Health-Law Rollout [The Wall Street Journal]

Medicaid Enrollment Spike a Threat to Obamacare Structure? [CBS News]