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Medicaid On The Eve Of Expansion: A Survey Of State Medicaid Officials About The ACA



December 30th, 2013

Twenty-five states and Washington D.C. are currently planning to expand Medicaid in 2014 under the Affordable Care Act. We recently surveyed Medicaid directors in these expanding states (for simplicity, we refer to D.C. as a state throughout this article) to assess expectations and implementation strategies regarding enrollment, costs, and access. This blog post describes some of the most relevant findings from our analysis.

With major policy changes underway for nearly all aspects of the Medicaid program, understanding the perspectives of state leaders is critical. By focusing specifically on those experiences of officials in states expanding Medicaid for 2014, we were able to explore in depth the specific policies states are pursuing in the areas of outreach and enrollment, cost control, and improving access to care for newly eligible adults. Telephone interviews were conducted between July and November 2013, with most occurring before open enrollment began October 1. The response rate was 88 percent (23 of 26 states). Respondents included the Medicaid director in 18 states, and other high-ranking officials appointed by the director to complete the survey in 5 states.

Overall, the responses indicated a combination of optimism in some areas – particularly enrollment efforts and benefits to beneficiaries of getting coverage – but also concerns about the impact of the expansion on state budgets, and specific barriers to care that remain in the program.

Expectations about Enrollment

Take-Up: Predictions of enrollment in the Medicaid expansion were optimistic. Over three-quarters of respondents estimated that between 50-75 percent of newly eligible uninsured adults would sign up for coverage. Two states expected 75-90 percent would participate, while three state officials predicted enrollment among newly eligible adults would be under 50 percent. Enrollment estimates among eligible adults prior to the ACA range from 62 percent to 67 percent, but this includes significant numbers of disabled people who traditionally have higher participation rates. Thus, state officials predict enrollment among non-disabled adults who will make up the bulk of the expansion to be relatively high compared to past experience.

These high projections may be in part because 12 of the states we surveyed are not starting from scratch and are instead converting previous state-based insurance programs into Medicaid coverage. While this transfer can pose administrative challenges, it should make it easier to target eligible individuals.

“Woodwork Effect”: New enrollment among previously eligible individuals (the so-called “woodwork effect” or “welcome-mat effect”) also may have major budget implications for states, since they will have to pay a larger share of costs for this group. Nearly three-quarters of respondents indicated that they expected the ACA to bring in a “moderate” or “large” number of previously eligible individuals into Medicaid due to the “woodwork effect.”

Pathways to Enrollment: The most common response among state officials was that they expect most newly eligible individuals to apply directly through the state Medicaid agency (45 percent), as opposed to through the Marketplace (23 percent) or via navigator assistance (23 percent). Two states said Medicaid and Marketplace enrollment would be one and the same. Of note, all states with federally facilitated or partnership Marketplaces expect direct applications to the Medicaid agency to be the primary enrollment pathway. In contrast, states with state-based Marketplaces expect that most applicants will come via the Marketplace or through navigator / other outreach assistance.

Taken together, this indicates that none of the expanding states expect the majority of Medicaid enrollment in their states to come from Healthcare.gov. These predictions suggest that challenges experienced by the federal government’s website likely will have much less impact for 2014 on Medicaid enrollment, compared to Marketplace coverage.

Preparations for 2014 Enrollment

All 23 states we surveyed have invested in new eligibility systems and information technology to facilitate new Medicaid enrollment in 2014. Only about half of states were planning any kind of media outreach. One-third of states were planning to facilitate Medicaid participation by enrolling individuals in Medicaid using their eligibility in the Supplemental Nutrition Assistance Program (SNAP), and early reports from one state demonstrate how effective this approach can be: 56,000 newly eligible individuals (an estimated 10 percent of the state’s uninsured population) signed up for Oregon’s Medicaid program in the first half of October, after their eligibility was determined based on enrollment in SNAP.

Managing Medicaid Costs

Cost Predictions: Overall, the majority of respondents predicted the Medicaid expansion would result in savings for their state’s budget over the next decade (Figure 1). However, nearly one-third of officials thought the expansion would be costly to their state, and the primary reason for this concern about state costs was related to the future of the federal match rate (FMAP).

The 100 percent federal match rate for enrollees newly eligible under the ACA makes it nearly impossible for state costs to increase in the short-term, other than via a large “woodwork effect.” While the ACA federal share is scheduled to decline to 90 percent by 2020, this is still far higher than the traditional 50-75 percent Medicaid match rate. However, 73 percent of respondents said it is “possible” or “likely” that the federal government will cut the FMAP promised in the ACA due to budget pressures over the next decade. Though Congress has never voted to cut the match rate (and has raised it temporarily on several occasions, most recently during the 2009 recession), the issue has become a point of contention among state and federal leaders debating the Medicaid expansion. Our findings suggest there is considerable uncertainty about federal budget commitments over the next decade, even among these states in support of expansion.

Figure 1: Predicted Cost Impact of Medicaid Expansion and Likelihood of Reduction in the Federal Match Rate Over the Next Decade

Sommers-Figure-1

Cost Containment Strategies: We asked officials to name up to two of the most promising methods for controlling program costs in Medicaid. Ninety-five percent of respondents cited implementing new payment models or new care delivery models. Common examples of the approaches being taken by states included patient-centered medical homes, accountable care organizations, and coordination of services for dual-eligibles. Some respondents also identified other cost-control approaches, including improved efforts to detect fraud, educating providers about cost saving, incentivizing healthy behaviors for patients, and investing in public health systems.

Managed Care: Over half of respondents reported that they viewed an expansion of Medicaid managed care as a promising cost-control mechanism. Considering this, it is not surprising that the vast majority of the newly eligible Medicaid population in these states will be enrolled in managed care, with 11 states reporting that between 76 and 99 percent of new beneficiaries would be in managed care, and 9 states predicting 100 percent in managed care. While consistent with national trends regarding the expansion of Medicaid managed care, this enthusiasm is not yet matched by the evidence, which has been equivocal on whether managed care reduces Medicaid costs.

Access and Quality

Benefits of Coverage Expansion: Officials were nearly unanimous that expanded Medicaid would help families pay their bills (95 percent), improve access to care (95 percent), improve health (100 percent), and reduce the burden of uncompensated care on providers (100 percent). When asked about potential adverse effects of the Medicaid expansion, 14 percent said it could foster dependency, and 36 percent said it had the potential to “overload the health care system” and make it harder for other insured individuals to get needed care.

Barriers to Care: When respondents were asked to name up to two potential barriers to care for new Medicaid beneficiaries in their state, the most common answers were a lack of specialty providers accepting Medicaid (50 percent) and disruptions in coverage over time (45 percent). A smaller number of respondents cited as barriers a lack of primary care providers accepting Medicaid (27 percent) and “cultural or non-economic barriers” (18 percent) such as language differences and attitudes towards health care. Twenty-three percent predicted no major access barriers for Medicaid beneficiaries in their states.

Primary Care Payment Increase: The consensus among over 90 percent of officials was that the ACA’s 2013-2014 increase in Medicaid primary care payment rates would produce no impact or only a “small increase in the number of providers” accepting Medicaid in their states. These results suggest that payment changes alone (especially of a temporary nature) may be inadequate to increase the supply of physicians willing to treat patients with Medicaid, and research shows that non-financial factors – such as administrative hassles and the social and clinical complexity of patients – also deter physicians from participating in Medicaid.

Integration of Care Between Medicaid and Marketplace Coverage: 64 percent of respondents agreed or strongly agreed that enrollment and coverage in 2014 between Medicaid and the Marketplace will be “well-integrated in their state.” However, several states that are implementing the Medicaid expansion but will have federally facilitated Marketplaces described unique challenges obtaining the necessary support within their state, as well as from the federal government, for integrating these two pathways to coverage.

To address potential disruptions in care for individuals switching between Medicaid and Marketplace coverage, states were taking a variety of steps. Eighty-five percent plan to extend Medicaid coverage through the end of the month for people transitioning to Marketplace plans. 61 percent said that they have encouraged plans and insurers to participate in both Medicaid and the Marketplace, and 45 percent will require transition-of-care policies.

More dramatic steps were being considered by a smaller number of states: Five states plan to adopt 12-month continuous eligibility for adults in Medicaid via an 1115 waiver, an option recently announced by CMS. Seven states are considering a Basic Health Program for individuals up to 200 percent of the federal poverty level, an option that will not be available until 2015. Four states are planning to use Medicaid dollars to purchase Marketplace coverage for all or some (e.g. pregnant women above 133 percent FPL) Medicaid-eligible individuals.

Implementation Challenges

The top two implementation challenges for 2014 reported by respondents were creating information technology systems to process applications, and coordinating coverage with the Marketplace. Several officials reported that outreach / enrollment efforts also pose a substantial challenge, as do controlling costs, overcoming delays in policy decisionmaking, and ensuring provider adequacy.

The most commonly voiced implementation challenge was the difficulty creating information technology systems to process applications, a concern that has proven prescient given the performance of the federal Marketplace during the initial open enrollment period. Sixty percent of the respondents agreed or strongly agreed that their state Medicaid departments are equipped with adequate funds and resources to manage the influx of newly eligible individuals come 2014, while 18 percent felt they did not have adequate resources.

Insights from Non-Expanding States

We also surveyed officials in states not currently planning to expand Medicaid. We received responses from 6 officials, and the results indicated that several states currently not expanding their Medicaid programs may yet do so in 2015-2016, though others have no plans to do so over the next decade. Officials in these non-expanding states also described strong stakeholder support for expanding, in particular from patient advocates, hospitals, and physicians.

Conclusions

The experiences of Medicaid officials in states that have chosen to expand Medicaid provide a range of valuable lessons for policymakers to consider. As these states are the first to implement the ACA’s Medicaid expansion, their experiences pave the road for states that are still considering the expansion for 2014 and beyond.

Our results show that expanding states generally expect high take-up among newly eligible and currently eligible individuals, with community based-assistance predicted to be instrumental in ensuring take-up. Officials reported a reliance on delivery/payment reform and managed care for controlling costs. The majority of officials surveyed – many building on prior state-based programs – expect the 2014 expansion to save their states money. However, even among officials from expanding states, many were concerned about expansion costs to their state budgets, and the majority thought it possible or likely that the federal government would cut the match rate over the next decade.

Acknowledging the unique experience of each state, these trends demonstrate new approaches and cautious optimism in the face of limited resources and tight deadlines. Despite focused areas of concern regarding specialty access and continuity of care, officials were nearly unanimous that overall the Medicaid expansion would significantly improve low-income adults’ access to care, health, and financial circumstances.

Disclosures: This blog post represents preliminary findings from a project supported by the Agency for Healthcare Research and Quality (AHRQ). The full and final version of the research article from this project will be published in a forthcoming issue of the American Journal of Law & Medicine.

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4 Responses to “Medicaid On The Eve Of Expansion: A Survey Of State Medicaid Officials About The ACA”

  1. Marc Says:

    Does anyone know whether this new expansion of Medicaid under the ACA has any impact on the five year “look back period” to be eligible for Medicaid?

    Thanks.

  2. Ronald Duther Says:

    Jesus, your thoughts are absolutely correct but think about it instead of paying a large sum at a time. Isn’t it good that we pay the amount in installments? Even when we pay the large sum at a time, we will eventually go broke if such a situations arrives.

  3. Jorge Sanchez Says:

    No questions about the impact of medicaid estate recovery on those whose present incomes are too low to qualify for subsidized insurance?

  4. Jesus Says:

    When I read about these Medicaid expansion plans what comes to my mind is, where are we going to get the money from? This is not Medicare, where people pay for twenty or thirty years and then at the age of 62 become eligible to use it. If Medicaid is free, where’s the money coming from? I think there’s so much the piggy bank can afford without going broke!

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