States That Expanded Medicaid Under ACA Find More Sign Up Than Planned

July 20, 2015
Mary K. Caffrey

In a pattern repeated among those who gained insurance on the Marketplace exchanges, it's clear the uninsured had more pent-up medical needs than policymakers realized.

Nearly 2 years into Medicaid expansion under the Affordable Care Act (ACA), many states that embraced the option to let the working poor gain coverage are finding the option more popular than they planned—and they are wondering what it will mean come 2017 when their budgets have to start absorbing 10% of the added cost.

Both states like Kentucky and California, which set up their own exchanges, and Ohio, which did not, are finding that unmet need exceeded expectations, according to a national roundup by reporters for the Associated Press, which found that at least 14 states have seen enrollment surge far beyond expectations.

In Kentucky, for example, the signups for 2014 were twice the projections, with nearly 311,000 newly eligible residents gaining coverage. This has caused the commonwealth to revise its Medicaid spending estimates from $33 million to $74 million for 2017.

While critics of expansion told the AP this scenario keeps them up at night, Governor Steve Beshear insists the change will serve Kentucky well in the long run by reducing costs elsewhere and creating a healthier workforce, which was a chief selling point when he expanded Medicaid. Earlier this year, he released a study that showed expansion resulted in the creation of 12,000 jobs and $1.2 billion in new revenue to healthcare providers.

California has seen a similar explosion, with 2.3 million people enrolling—nearly 3 times’ expectations. Growth in Medicaid has jumped from $91.5 billion to $115.4 billion in 5 years. In California, a chief challenge has been access, with the newly insured in Medicaid managed care often struggling to find physicians who will take their coverage and critics saying there are shortages of key specialists.

The immediate concern of state lawmakers is that Medicaid, at least in the short run, will crowd out other items from the budget, such as funding schools or fixing roads. Unlike the federal budget, which can function with deficit spending, states must balance their budgets, which means extra spending on Medicaid requires reduced spending elsewhere or raising taxes or fees.

Not only are the Medicaid rolls surging, the those who are gaining coverage for the first time—both through Medicaid expansion and on the exchanges—are proving to need more costly care than anticipated. For those paying premiums, this has resulted in unexpected increases; it has been common for insurers to seek rate increases in the double digits for 2016.

What’s apparent is that low- and middle-income Americans had lived with pent-up medical needs for some time before they gained access to care under the ACA, and it will take some time for these costs to work through the system.

The flip side of expansion is showing up on medical side—a study in Diabetes Care earlier this year found that states with Medicaid expansion had a 23% higher rate of diagnosing new diabetes cases of Medicaid enrollees than states without expansion in 2014. The only explanation is the fact that more people were insured.

Earl Charles Williams Sr. of Chicago, a 59-year-old social worker, described the change that has occurred now that he is being treated for his diabetes regularly.

“There are so many people who really need the care,” he told the AP. “They have nothing. And when they have nothing, you can see the effect on the community.”