Medicaid Expansion Leads to Inconsistent Cost Effects

Added on Jul 21, 2017

Medicaid Expansion Leads to Inconsistent Cost Effects

States that expanded Medicaid in 2014 both increased and decreased their Medicaid spending that year, compared with the nonexpansion states, according to an analysis from the Centers for Medicare & Medicaid Services (CMS).

The 26 states, along with the District of Columbia, that expanded Medicaid eligibility by the end of 2014 had an increase in total Medicaid spending of 12.3% over 2013, compared with an increase of 6.2% in nonexpansion states.

A different trend emerged for per-person Medicaid spending, which rose by 5.1% in the nonexpansion states from 2013 to 2014 and dropped by 5.1% in the expansion states, officials with the CMS Office of the Actuary in Baltimore reported in an article published online ahead of print on June 14 in Health Affairs (Health Aff. 2017. doi: 10.1377/hlthaff.2017.0416).

Medicaid expansion brought in more relatively inexpensive adults—43% of total enrollment in 2014, compared with 32% in 2013—and reduced the proportion of disabled and aged enrollees, whose cost per person is much higher, the researchers wrote.

An analysis of private health insurance spending showed that nonexpansion states had larger increases in both higher per-person and overall costs than expansion states, with per-person costs up 3.4% for nonexpanders and 2.7% for expanders, and total costs up 6.8% in nonexpansion states and 4.6% in expansion states. Higher per-person spending growth for enrollees in the state and federal marketplaces, compared with nonmarketplace individual coverage, was partially responsible for this trend, the researchers stated.