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You are here: Home / Politics / An Unexamined Scandal / Getting dropped hurts

Getting dropped hurts

by David Anderson|  October 28, 20147:23 am| 11 Comments

This post is in: An Unexamined Scandal, Anderson On Health Insurance, C.R.E.A.M., All we want is life beyond the thunderdome

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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.

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Reader Interactions

11Comments

  1. 1.

    Cervantes

    October 28, 2014 at 9:12 am

    Thanks.

    Re the following:

    Now, the Center for Budget and Policy Priorities has released some very interesting on state levle Medicaid spending in 2014

    It’s a Kaiser study.

  2. 2.

    rikyrah

    October 28, 2014 at 9:19 am

    you keep on dropping the truths..

    thank you

  3. 3.

    Richard Mayhew

    October 28, 2014 at 9:29 am

    @Cervantes: I saw it via CBPP, and wrote the piece while trying to give my son a bath — correction to follow.

  4. 4.

    Cervantes

    October 28, 2014 at 9:40 am

    @Richard Mayhew:

    Thanks again.

    I don’t see that any “correction” is needed. I provided a link to the KFF study if people want to read it for themselves. I suppose I should have noted that the authors are Robin Rudowitz, Laura Snyder, Vernon Smith, Kathleen Gifford, and Eileen Ellis.

  5. 5.

    gvg

    October 28, 2014 at 10:22 am

    woodworkers? I didn’t realize that was a significant portion of the population. I think you meant workers and perhaps auto correct changed it, 3 times?

  6. 6.

    Mnemosyne

    October 28, 2014 at 10:45 am

    @gvg:

    IIRC, “woodworkers” in this context means people who were previously not covered by health insurance but come out of the woodwork when there’s a way for them to access it at a reasonable cost.

  7. 7.

    Cervantes

    October 28, 2014 at 11:01 am

    @Mnemosyne:

    Yes, the term is used in several ways in this context; one usage refers to people who have been eligible but are only now coming out to be enrolled.

  8. 8.

    Mnemosyne

    October 28, 2014 at 11:04 am

    @Cervantes:

    Right, but the one way it’s definitely not being used here is to refer to people who work with wood for a living.

  9. 9.

    ThresherK

    October 28, 2014 at 11:16 am

    Do we really need any numbers on this headline?

    I’m not one for turning “everybody’s stories” into cold, hard evidence, but I would submit to the collective experience of the crowd here, if that crowd is “every under-20 unmarried male motorist who has had to change car insurance companies”.

    (Not shutting out women, but I can’t speak to their travails here.)

  10. 10.

    ? Martin

    October 28, 2014 at 3:04 pm

    There were a number of studies showing something similar due to the gap between SS retirement and Medicare start ages. That individuals that retired earlier than 65 would drop coverage and coast until Medicare kicked in. When it did, they hammered the fuck out of the most expensive services because cheap to treat conditions were now expensive to treat.

    One of the early efforts in ACA was to solve that problem in an effort to cut Medicare costs – not by denying coverage but by making sure individuals rolled onto Medicare in better health. That’s a big part of why the individual mandate came about – to fill the gap between employer coverage and Medicare. Lowering the Medicare age was politically impossible, so the cost of the mandate becomes a new retirement consideration for some people.

  11. 11.

    Nathanael

    November 1, 2014 at 11:56 pm

    I recall what an unbelievable hassle Medicaid was in NY prior to ACA — the asset limits, in particular, were a nightmare. (I helped a few people navigate it.)

    Suddenly it’s just income-tax-reporting based. Very simple.

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