Insurance Commissioner Roger Sevigny … Findings of report are “not conclusive.”
CONCORD — The path New Hampshire has taken toward expanding Medicaid is pushing prices up for everyone else who buys health insurance on the Obamacare exchange at healthcare.gov, according to an analysis recently completed for the Insurance Department.
The average medical costs for the newly insured Medicaid patients are 26 percent higher than the non-Medicaid population on the exchange, even though the Medicaid patients are on average younger.
That is in large part because Medicaid patients are getting platinum plans that they use more aggressively because they have no co-pays or deductibles, while those paying some or all of their policy premiums are mostly in silver plans that they use more judiciously, according to the actuarial firm conducting the analysis.
“Generally, when populations are enrolled in plan offerings with low member cost-sharing, utilization of services is greater,” according to the actuaries from Gorman Actuarial who wrote the report. “This is referred to as induced demand.”
Gorman found that the presence of the expanded Medicaid population in the individual market raised average claim costs for the entire market by 14 percent.
The findings, based on 2016 claims data, were presented Monday to a legislative commission studying the future of expanded Medicaid in New Hampshire, which, in its current form, expires at the end of 2018.
One goal of Obamacare was to get more people covered, and part of the strategy was to make it easier to qualify for Medicaid, so-called “expanded Medicaid,” with the federal government paying 100 percent of the additional cost through 2016. Starting in 2017, the match declines slightly each year until it reaches 90 percent in 2020 and remains there, assuming the law is not changed or repealed.
Using the private market
Nineteen states, mostly in the South and Midwest, decided not to expand Medicaid, while New Hampshire was among 31 states and the District of Columbia that added to their Medicaid rolls. New Hampshire and Arkansas decided to use the private insurance market to cover the newly insured.
To qualify for traditional Medicaid in New Hampshire, you had to have low income as measured by federal poverty levels, and have an additional qualifying condition, such as being a parent or caretaker, disabled or pregnant.
The analysis can be viewed below:
With expanded Medicaid, unmarried, childless, able-bodied adults earning up to 138 percent of the federal poverty level could qualify, and in New Hampshire 40,000 took advantage of the opportunity.
But New Hampshire did not put those 40,000 new enrollees into the same traditional Medicaid program that was already serving 100,000 residents through managed care organizations that control costs. Instead, they obtained coverage from one of the companies offering plans on healthcare.gov, mostly the Ambetter plans offered by New Hampshire Healthy Families.
When the program was being designed that way, ostensibly to leverage the private sector instead of growing a government program, conservative groups like Americans for Prosperity warned against blending the new Medicaid customers whose costs are fully covered with customers who face co-pays and deductibles.
“Expanding Medicaid at all was a bad idea,” says Greg Moore, state director with Americans for Prosperity. “Expanding Medicaid in the individual marketplace was a disastrous one, and now we are asking people who are forced to buy health insurance under the Affordable Care Act to subsidize this bad decision.”
Proponents of expanded Medicaid, including the state’s hospitals, health care providers and many in the addiction treatment and recovery community, say the expansion has been an overall plus to the state, particularly in getting insurance for people in need of addiction-related services.
Facing a decision
So the state has to decide what to do about the program, as it sunsets in its current form in a little more than a year. Insurance Commissioner Roger Sevigny said the findings in the Gorman analysis are “not conclusive” on whether expanded Medicaid should continue in its current form in New Hampshire.
“How to best cover this population is a complex question that the New Hampshire Legislature will wrestle with in 2018,” he said. “These are times of unprecedented uncertainty for individual markets in New Hampshire and across the country — a factor that compounds the difficulty of the reauthorization question.”
Most New Hampshire residents who have health insurance obtain it through their employer in a group plan. But the state has about 90,000 individuals who buy insurance on the individual market, via healthcare.gov.
Of that 90,000, almost half (40,000) consist of the fully covered, expanded Medicaid population. The other half, about 50,000, consist of individuals who purchased policies on the exchange, many with premium subsidies.
The big question
One of the big questions the state has to face, if it keeps expanded Medicaid at all, is whether or not to keep the newly eligible population in the individual market or put it under traditional Medicaid.
Tyler Brannen, health care policy analyst in the Insurance Department, says the choice is not that obvious. Leaving the Medicaid population with the paying customers increases costs, but losing nearly half the risk pool in the online exchange would come with consequences of its own.
“They have increased claims cost,” says Brannen of the new Medicaid patients, “but in the future, they may be the ones who provide some stability because they may not be the people dropping out because of price increases.”