Health insurance premiums are higher in states that have not expanded Medicaid, according to a report released today by the Department of Health and Human Services.
The marketplaces are more stressed in states that did not expand the program because the two were supposed to work together to expand health coverage under the Affordable Care Act, the report says. That’s because the marketplace risk pools in states that didn’t expand Medicaid include a group of poorer individuals, who are generally sicker than people with higher incomes, that weren’t anticipated to be part of those risk pools.
The report estimates that insurance premiums are about 7 percent lower in states that expanded Medicaid than in states that did not. Nineteen states have not expanded the program, which are nearly all led by Republican governors or legislatures.
“While Marketplace and Medicaid coverage differ, they work together in many ways. As a result of the ACA, the two programs’ eligibility criteria and processes are closely aligned,” the report says. “Individuals move from one type of coverage to another as their incomes and other circumstances change, insurers participate in one or both markets, and there are interactions between the programs’ risk pools.”
Under the expanded program, people within 138 percent of the federal poverty level are eligible for Medicaid. In states that did not expand Medicaid, people within 100 percent and 138 percent of the federal poverty level are eligible for subsidized coverage on the federal exchanges.
People within that range make up, on average, 40 percent of the marketplace population in non-expansion states, as opposed to 6 percent in states that expanded Medicaid, the report says. Typically, low-income people have poorer health than people with higher incomes, meaning low-income and potentially sicker people make up a greater part of the exchange risk pools in states that have not expanded Medicaid.
Insurers set premiums based on the health status and expected costs of covering individuals within a certain market.
“The 7% premium difference in expansion versus non-expansion states is consistent with differences in expected spending of Marketplace enrollees across these types of states due to the variation in enrollment and expected spending by income,” the report says.
In its final year, the administration has tried to highlight why they think states should expand Mediciad.
“Today’s report identifies yet another group that would gain if all states chose to expand Medicaid: Marketplace consumers, who would see lower premiums,” HHS Secretary Sylvia Burwell said in a statement. “These gains are on top of the direct benefits of expansion for millions of Americans who would gain coverage and on top of the economic benefits for states.”