Wednesday, January 02, 2019

When states expand Medicaid, is there a multi-year marketplace drain?

Happy New Year to the 200,000 Virginians who have gained Medicaid coverage through the state's Medicaid expansion, which went into effect today. Enrollment began on November 1. ACA marketplace enrollment in Virginia is accordingly down 16%, from 400,000 in 2018 to 334,000 this year. The vast majority of that drop is attributable to the Medicaid expansion, as Virginians with incomes in the 100-138% FPL range, previously eligible for marketplace coverage, are now eligible for Medicaid.

I had previously calculated that just shy of 100,000 Virginians who were enrolled in the ACA marketplace as of the end of open enrollment for 2018 would likely be eligible for Medicaid. the enrollment drop attributable to Medicaid is probably a bit more than half that number. That fits a pattern, I think, established in other states that enacted belated Medicaid expansions. Expansion appears to drive marketplace enrollment reductions for more than one year.

Charles Gaba has helpfully charted ACA enrollment by state, 2014-2019. Since the ACA marketplace launched in 2014, eight states have enacted belated Medicaid expansions. Below is enrollment data for six that enacted expansions that went  into effect after 1/1/15*, showing a) the enrollment drop in the first year the expansion went into effect and b) the enrollment drop in subsequent years. For comparison, in the far right column I've added the enrollment drop in all HealthCare.gov for the years following the state's first-year drop -- that is, 14% for 2016-19 and 9% for 2017-2019.


State
Expansion date
Enrollment drop -year 1
Enrollment drop after yr 1
Total Hc.gov enrollment drop after state's yr 1
PA
1/1/15
 7%
16% (2016-19)
14%
IN
2/1/15
11%
24% (2016-19)
14%
AK
9/1/15
17%
  7% (2017-19)
  9%
MT
1/1/16
10%
13% (2017-19)
  9%
LA
7/1/16
33%
35% (2017-19)
  9%
VA
1/1/19
16%



In all states except Alaska, the enrollment drops in years after the first year of Medicaid expansion (after the initial drop, that is) exceed the average for HealthCare.gov states. All of these states use the HealthCare.gov platform, where most ACA enrollment losses since 2016 are concentrated.

A couple of caveats:

1. While Medicaid expansion reduces a state's marketplace enrollment (as about 1/3 of marketplace enrollees in those states become Medicaid-eligible), it likely improves the risk pool. A CMS study found that in states that expanded Medicaid, marketplace premiums were likely 7% lower than they would be had the state refused expansion.

2. Premiums in the ACA marketplace have been extremely volatile, and many other factors besides Medicaid expansion or nonexpansion have affected enrollment -- including radical cuts to federal spending on advertising and enrollment assistance, the threat of ACA repeal and the reality of individual mandate repeal, Trump's cutoff of direct federal reimbursement to insurers for Cost Sharing Reduction and the consequent premium hikes and discounts resulting from silver loading, federally funded state reinsurance programs (a stabilizing factor in Alaska), etc. etc.

All that said, it does seem that Medicaid expansions take more than a year to shake out and complete their impact on the private plan marketplace.

This multi-year shakeout, if it's not a mirage, may be a factor in something I've been trying to puzzle out: the steeper enrollment losses, 2017-2019, in expansion states on HealthCare.gov.  Discounting the first-year losses to expansion, expected when a state expands, the continued drain in years following may not be trivial. Enrollment losses excluding the first year of expansion in Pennsylvania, Indiana and Louisiana total 166,000 (2016-2019 in PA and IN, 2017-2019 in LA).  Of course, many factors could be driving those losses.

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* While Michigan and New Hampshire also expanded Medicaid after the ACA launch, they  expanded early enough in 2014 to impact 2015 enrollment, overall enrollment in HealthCare.gov states increased 62% in 2015, making the impact of Medicaid expansion hard to measure. 

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