The Virginia General Assembly voted last week to approve “Medicaid Expansion” for certain eligible populations. The headlines are breathlessly declaring that there will be 400,000 newly insured individuals in Virginia, which on its face might seem like a good thing for HCA which has 3,201 beds in the State. Unfortunately, for HCA and anyone who is counting on 400,000 people to start paying for health care services in Virginia, the new market opportunity is more like 140,000.
The “400,000” is probably the result of rounding up the census estimate for people under 65 living at 100 to 138 percent of the FPL of 370,565. The 400,000 figure ignores the fact that some portion of the population is enrolled in Medicaid already, is purchasing insurance via the Federally Facilitated Marketplace, is enrolled, for one reason or another in Medicare or is part of that 10 percent of Americans who have stubbornly resisted purchasing health insurance even in the frothiest moments of the ACA.
The Virginia Medicaid expansion has two parts. It calls for expanding Medicaid eligibility to presumably to childless adults living at 0 to 100 percent of the FPL. The statute indicates that this population will be subject to “existing Medicaid cost-sharing provisions.” The second major provision of the expansion extends eligibility to childless adults living between 100 and 138 percent of FPL.
Of the estimated 370,000 people living in Virginia at 100 to and including 137 percent of FPL and under 65 years of age, about 130,000 are currently enrolled in Medicaid because they meet other eligibility requirements. Another estimated 46,200 are enrolled in plans offered on and off the ACA exchanges About 23,000 are enrolled in Medicare and 102,000 enrolled in employer-based insurance. That leaves about 83,000 people who are currently uninsured who would gain better access to health care services as a result of the expansion.
Similarly, there are an estimated 800,000 people in Virginia living below 100 percent FPL. Of this amount, about 176,000 are uninsured. The balance is insured through existing Medicaid programs, employer-based insurance, the individual market or Medicare.
If the Virginia expansion achieves the lowest uninsured rate seen during the height of the ACA years – about 10 percent – then Virginia will add about 142,000 uninsured people to the insured rolls as a result of expansion.
It is nothing to sneeze at as a 142,000 reduction in the 591,000 uninsured Virginians is significant and should result in less charity care among Virginia's providers.
If Virginia enrolls more than the estimated 142,000 uninsured it will do so by cannibalizing other insured classes like employer-based and direct purchase insurance which usually offer higher reimbursement levels to providers than Medicaid.
In Louisiana which expanded Medicaid in July 2016, employer-based insurance dropped 23 percent in 2016 while Medicaid enrollment increased 19 percent for people living at 100 to 138 percent of the FPL.
Unlike Louisiana, Virginia is structuring their Medicaid expansion in such a way that migration from employer-based and direct purchase insurance is discouraged. As we pointed out in February of last year, the Medicaid expansion paradigm had shifted under the Trump administration from an enrollment free-for-all to the Indiana model. The Trump administration’s fingerprints are all over Virginia’s expansion plans.
The authorizing legislation includes the following requirements for the program:
- Establishes two pathways for eligible individuals: enrollment in an existing Medicaid managed care plan or premium assistance for the purchase of employer-sponsored coverage, if “cost effective.”
- Requires “health and wellness accounts” similar to the Indiana POWER account - a sort of state sponsored HSA -to cover out of pocket expenses
- Includes provision to foster appropriate use of emergency room services such as fees for non-emergent care
- Requires monthly premium payments not to exceed 2 percent of income
- Establishes a work, training or employment requirement for every “able-bodied” working-age adult enrolled in Medicaid, on a sliding scale linked to number of months enrolled
These are features included in Indiana’s program from the start. As a result, enrollment in Medicaid in Indiana has been more moderate relative to the rest of the U.S. Ignoring the first month of enrollment after the effective date of expansion, the average monthly YoY growth of Medicaid enrollment in Indiana was 13.68 percent in year one, 2.2 percent less than the national figure.
Indiana experienced peak YoY growth of 20.04 percent in February 2016 while nationally YoY enrollment growth topped out at 21.51 percent in January 2015. Enrollment in Indiana’s Medicaid program is now falling faster than the rest of the nation.
Additionally, Indiana did not experience quite the same cannibalization of employer-based insurance as seen in other states, based on available data. According to the Census Bureau, employer-based insurance enrollment rose 3 percent in 2015 and fell 11 percent in 2016, some of that decline attributable to demographic and economic factors.
In short, expansion of Medicaid in Virginia is not likely to be the bonanza that the 400,000 headline number suggests uness the executive branch engages chooses to ignore the significant guardrails imposed by Virginia's legislature.
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Emily Evans
Managing Director
Health Policy
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