Medicaid's new patients: healthier, and maybe cheaper

Since the launch of the Affordable Care Act last fall, some five million more Americans have enrolled in the nation's healthcare program for low-income people.

With only half the states expanding their Medicaid programs under the Affordable Care Act, researchers believe that number would double if all 50 states moved ahead, and several new reports suggest it may be cheaper for states to go ahead than previously estimated.

Cost is one of the top reasons politicians cite to explain why they're against expanding the program.

A recent Congressional Budget Office report said the cost for states would be nearly a third less than expected. Why the cut?

The CBO over-estimated the number of people eligible for Medicaid pre-ACA who would come out of the woodwork – an effect known in the industry as "woodworking" – as efforts got underway to recruit newly-eligible folks to sign up for Medicaid. And because fewer of previously-eligible people signed up, the bill for states is lower, because states pay a vastly higher share of costs for the previously eligible.

And there are other signs that Medicaid's expansion may help the bottom line.

"We improved care. We improved outcomes and we reduced costs," says Dr. Randy Cebul, who runs the Center for Health Care Research & Policy. He's also the one keeping tabs on the data from a Medicaid pilot project in Cleveland involving nearly 30,000 low-income residents.

Cebul says in this test case for Medicaid expansion in Ohio, health providers helped cut ER use, increased primary care visits and kept spending 25 percent below projections.

"There are probably half of the states that have not expanded Medicaid," he says, "and I think this should be a reason they want to reconsider their decision."

And new Medicaid patients are generally less depressed and not as heavy as people already enrolled, according to a study from Steven Hill, an economist with the federal Agency for Healthcare Research and Quality.

"I think some people were concerned that the people who will be newly eligible might be very unhealthy," he says. "But that's not what we found. And so they may need even less care than current enrollees," he says.

Edwin Park with the left-leaning Center on Budget and Policy Priorities believes the growing body of information strengthens the proposition that states can afford an expansion.

"All this evidence continues to undermine that it's too costly for the states to take up," he says.

There's just one thing.

Many health policy people, including Park and George Washington health policy professor Sara Rosenbaum say state opposition isn't driven by economics as much as philosophy.

"It's a belief that somehow when you help the poor with governmental assistance you are encouraging bad behavior, laziness," says Rosenbaum.

Josh Archambault with the right-leaning Foundation for Government Accountability says there's some truth to that.

Ultimately though, he says the problem is that you're expanding a broken program that doesn't work for people currently enrolled. And why, he asks, would you just expand something like that?

"Not only does it hurt the people you are adding, but it already hurts people who are on the boat," he says.

But what some conservatives want – and they've begun to get it – is more flexibility in how the expansion program is designed. Even with that, full acceptance could take years. Don't forget, Arizona adopted the original Medicaid program in 1982, 17 years after it was first introduced.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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