Commercial risk will be a critical catalyst of progress – it’s complicated, but is it possible? We think so.

Blog Post

A closer look: Why Medicaid enrollment is surging in exchanges

October 22, 2013

    Dan Diamond, Managing Editor

    Since the Affordable Care Act's new health insurance exchanges launched three weeks ago, Washington state has looked like a world-beater.

    Through Oct. 21, the state's health exchange had reported 35,528 "completed enrollments," a figure that would seem to shatter the White House's October goal of 23,800 sign-ups—and with 10 days to go in the month, too.

    But take a closer look: many of the early enrollees aren't signing up for private plans. Instead, they're new Medicaid patients.

    About 90% of Washington's "completed enrollments" are in Medicaid, with the majority of enrollees newly eligible under the Medicaid expansion that takes effect on Jan. 1.

    While data isn't available across all 15 state-based exchanges, it's a similar story in Minnesota (90% of early enrollment has been in Medicaid and other public programs). And Connecticut officials report that roughly half of all early enrollment through their exchange has been in Medicaid.

    Kentucky—another state that's reported tremendous early enrollment figures—is seeing a comparable trend: about two-thirds of all sign-ups are for Medicaid, officials said by email.

    This has been a surprise, observers acknowledge.

    The ratio of Medicaid enrollees to private-plan sign-ups "was staggering, way higher than I was expecting," Matt Salo told me on Tuesday. Salo's the executive director of the National Association of Medicaid Directors.

    So why this early surge in Medicaid enrollment? Salo and others can't say for sure, but they have some theories.

      1) Medicaid outreach was already underway. Well before Oct. 1, officials and advocates in the states that had opted to run their own exchanges—which also are all states that have opted into the ACA's Medicaid expansion—planned ambitious efforts to get millions of existing and newly eligible residents into the public program.

      Writing at Modern Healthcare, Steven Ross Johnson reports that Washington state officials credit an awareness campaign, which began last month with TV ads and 3,000 community-based volunteers, for helping boost early Medicaid enrollment.

      2) Certain states were well-positioned to rapidly sign-up residents. Minnesota and Washington not only have a history of successfully expanding public coverage—they're also "Goldilocks states," according to Kip Piper, a former state Medicaid official and White House budget officer.

      "Not too big, not too small," Piper said. "So [they're] big enough to have the capabilities and staff but not so large as to be overwhelmed" by a rush of new Medicaid applicants and quickly enroll them.

      3) There's little burden on applicants. States that took Medicaid can auto-enroll patients in the program, noted Robert Laszewski, an industry analyst and former executive at a health insurer.

      For private plans, "it's a tougher sale because people will still have hard dollar premiums and deductibles and co-pays. Selling [health coverage] for free will get you a lot more buyers than selling it for a price," Laszewski added.

    • Are you ready to serve your new customers? If not, we'll show you how.
      Our popular white paper offers tactics and strategies to help providers prepare for an influx of new patients through the exchanges.

    Understanding the distinction

    It might not matter how the ACA expands health coverage, some of its supporters suggest, so long as the law reduces the nation's uninsured population.

    But architects of the law say that there are some important distinctions between enrollments in Medicaid and sign-ups in private plans.

    Payer mix is already an ACA-related concern for providers, given Medicaid's lower per-procedure reimbursement rates and the potential for significant new volumes. While the impact ranges by market, hospital leaders are hoping to cross-subsidize some of their expanded Medicaid volumes with patients newly covered by the exchanges' private plans.

    And private insurers also are watching enrollment numbers carefully; they agreed to support the ACA—and accept new market reforms that prevented them from denying coverage to some patients and limited potential profits—in exchange for the promise of millions of new customers.

    If those volumes don't materialize, some insurers may withdraw their support—or even attempt to withdraw from the exchanges or sue the administration. The White House will host insurance company executives on Wednesday, seeking to reassure them that their patience will be rewarded with the promised new customers.

    Washington state officials are sounding a similar note. According to the latest data, nearly 17,000 Washington residents have completed applications for private plans but haven't picked one yet.

    "I think there is clearly a large body of shoppers who are looking at what's available to them but not quite ready to commit," a spokesperson for the Washington Health Care Authority told Modern Healthcare.

    How do health insurance exchanges work?

    Government officials often compare the exchanges to online travel sites like Expedia or Orbitz. But given that many exchange websites aren't fully functional yet, I find it helpful to picture a big box store.

    For more: Read our primer, or our white paper, for answers to eight key questions and implications for providers.

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.