Getting dropped hurts

Back in 2008, there was an excellent study on the cost of losing health insurance and then regaining it for people with chronic conditions.

RESULTS:

Overall total program expenditures were higher for post-lapse periods compared with pre-lapse periods. Total expenditures were estimated to increase by $239 per member per month for the 3-month period. The likelihood of having any expenditure was actually lower in the post-lapse period. However inpatient and emergency room use was higher.

CONCLUSIONS:

The results from this study suggest that interruptions in Medicaid coverage are associated with overall greater program expenditures in the post-lapse periods. However, this increase in expenditures seems to be driven by a subset of individuals whose greater use of inpatient and emergency room services increased overall program costs.

$240 per member per month for Medicaid members in the mid-2000s is a massive number.  Diabetics are risk adjusted to be more expensive, but this is a 50% (guesstimate) increase in per member per month cost. Most of the cost will be concentrated, as expected, on the high end users.  Intuitively, this makes sense as diabetes and several other chronic conditions can be fairly cheaply managed if there is routine, regular care to prevent acute crisis.  When that routine care disappears, crisii are far more likely to happen, and more likely to be more expensive on a per-event basis.  So once care is reestablished, there are already crisii in the pipeline that needs to be paid for.  This story makes sense.

Now, the Center for Budget and Policy Priorities CBPP passing along Kaiser information has released some very interesting on state level Medicaid spending in 2014:

The 28 states (including Washington, D.C.) that have expanded Medicaid or will expand it this fiscal year (2015) expect their Medicaid spending to grow by 4.4 percent this year, compared to 6.8 percent among non-expansion states, Kaiser’s annual survey finds (see graph)…What’s more, state Medicaid spending growth will actually slow in expansion states this year, down from 6.6 percent last year. Meanwhile, non-expansion states expect a modest uptick in state spending growth from last year.

At least some of the non-expansion state spending growth is due to the woodworkers who were previously eligible but not enrolled now enrolling.  We know that the states which have not expanded, have on average, been less aggressive in pushing Legacy Medicaid enrollment pre-PPACA, so they should, all else being equal, have more and sicker woodworkers than the typical expansion state.  Another portion of this drop is most likely a mechanical drop.  Some states, more likely to be Expansion states, had expanded pre-PPACA Medicaid to certain groups with state only funds.  Those individuals make under 138% FPL, so they’ve been transferred to federal expansion dollars instead of state dollars.  However, this is not most of the story.

I am speculating that a decent chunk of the cost growth slowdown and differential for Expansion states compared to non-Expansion states is a more streamlined set of care for members who were marginally eligible for Legacy Medicaid.  In 2013, a person who made a few dollars too many, or had been on a program for a month too long would be dropped from Legacy Medicaid, and previously manageable conditions could become un-managed.  In 2014 in expansion states, that person would be dropped from Legacy Medicaid and instantly re-enrolled into Federally funded Expansion Medicaid.  The only difference they would see in most expansion states was a different ID card in the mail three weeks later.

This is pure speculation on my part, but that story would explain some of the differential past the woodworkers and cost shifts.