Milliman: More Room in the Medicaid Inn Needed in 2014

By Clive Riddle, July 29, 2011

Milliman’s Robert Damler and Paul Houchens have just released a white paper:  “Social Security and modified adjusted gross income: Estimated impact to Medicaid enrollment under the PPACA.”

Their abstract states “The Patient Protection and Affordable Care Act (PPACA) provides for an expansion of Medicaid eligibility for individuals who have an annual household income at or below 138% (including the 5% income exclusion) of the federal poverty level (FPL). Recent discussion has turned to individuals who may qualify for Medicaid even though their households have significant Social Security or Supplemental Security Income (SSI). Using the 2009 American Community Survey (ACS) data published by the U.S. Census Bureau, this paper explores the potential number of individuals receiving Social Security or SSI and other family members within the household who may have been excluded from the Medicaid population expansion analyses because of the differences between defining household income under the public surveys and the modified adjusted gross income (MAGI). The MAGI methodology will be used to determine eligibility for Medicaid and exchange subsidies under the PPACA.”

What this all means is Damler and Houchens have identified and quantified an additional source of potential Medicaid enrollment that had not figured into most Medicaid projections currently in use. They do caution that while their results are based on the 2009 American Community Survey, “results using other publicly available survey data or internal government resources may differ significantly.” Hence the different numbers currently in use.

But what if Damler and Houchens are right?  They conclude that “based on calculating household income with and without non-taxable Social Security and Supplemental Security Income included, we estimate from the ACS data that approximately 2.3 million additional individuals nationwide will be eligible for Medicaid beginning in 2014, because of the exclusion or partial exclusion of these income sources.”

However, Damler and Houchens note, these 2.3 million bodies didn’t just appear from nowhere.  They would have largely qualified for subsidies anyway under the state health insurance exchanges. The added cost implications are in who pays for them (state vs. federal-  and their Medicaid eligibility increases state costs according to the authors) as well as benefit design (Medicaid benefits are richer, thus the costs will be higher under the Medicaid program.)

The authors also point out that not all 2.3 million newly Medicaid eligible persons will “take up” Medicaid enrollment. They estimate 897,000 (as of 2009) currently have employer coverage and many will elect to remain under those plans. Another 86,000 have military coverage who may also retain current coverage. Less likely to stay put would be 329,000 paying for their own individual coverage or the 698,000 uninsured (these numbers add up to less than 2.3 million as they reflect the 2009 actual ACS data, before adjustment to 2014 numbers.)

Regardless,  states, HIX and Medicaid stakeholders should pay attention to the implications. The authors do provide state by state estimates in their analysis.