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Expanding Medicaid can cut private health risk, feds say

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If a state takes Medicaid expansion money, that could improve the health level of its commercial individual health risk pool enough to cut individual health premiums.

Analysts at the Office of the Assistant Secretary for Planning and Evaluation, an arm of the U.S. Department of Health and Human Services, make that case in a new commentary.

The analysts compared individual exchange plan prices in counties in states that took Affordable Care Act Medicaid expansion money and in counties across the state line in states that rejected Medicaid expansion money.

The HHS analysts looked at price numbers for 94 counties in 19 states.

Related: ACA exchange issuers head South

The analysts found that individual exchange plan premiums were 7 percent lower in the Medicaid expansion state counties.

That might be partly because the Medicaid expansion program provides money states can use to make Medicaid available to adults earning from 100 percent to 138 percent of the federal poverty level. 

About 20 percent of the people in that near-poor income category are in fair or poor health, compared with just 8 percent of people with incomes over 138 percent of the federal poverty level, the analysts say.

Simply putting near-poor people in Medicaid plans, rather than individual health plans, could cut commercial plan costs by reducing the percentage of individual health enrollees in fair or poor health, the analysts say.

Putting near-poor people in Medicaid plans could also help improve the risk profile of the Medicaid plans, because near-poor people tend to be healthier than people with incomes below the federal poverty level, the analysts say.

The analysts also produced a separate paper showing that, for most people who qualify for advance premium tax credits, the Affordable Care Act advance premium tax credit program will hold most ACA exchange system users’ share of the monthly premium costs to less than $75, even if the full, unsubsidized cost of the premiums for all available products rises by 50 percent.

About 87 percent of exchange plan users now qualify for the premium tax credits, and 70 percent can now get exchange plan coverage for an out-of-pocket cost of $75 per month or less, the analysts say.

If all issuers increase their prices by 50 percent, the ACA subsidy support would increase enough to increase the percentage of consumers who can get coverage for $75 per month or less to 76 percent, the analysts say.

Federal budget analysts say ACA exchange premium subsidy spending has been lower than originally expected, because premium increases have been lower than expected, and stability in employer health plan enrollment has held down individual exchange plan enrollment.


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